Earnings call transcript Q2 2023

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Operator

Good day and welcome to the Corteva's Second Quarter 2023 Earnings Call. Today's conference is being recorded.

At this time, I'd now like to turn the conference over to Kim Booth. Please go ahead, ma'am.

Kim Booth

Good morning and welcome to Corteva's second quarter and first half 2023 earnings conference call.

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

Tim will join Unit; Q&A session. Seed Vice Additionally, Crop the Vice King, President, Unit, Robert Executive Business Business Protection Executive Glenn, and President,

We presentation our and website through supplement link to slides our call during this Corteva have on of the the prepared webcast. posted Investor to remarks Relations section the

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

non-GAAP certain Risk slide in actual and section references measures. schedules, forward-looking on filed Reconciliations reports from the uncertainties, we'll be and differ summary release these our statements. making any of along Investor Relations those any SEC. could not with the our can risks available We in but presentation, related update with the these to, Please supplemental non-GAAP financial limited to to call Factors today's earnings Our including press this results measures financial discussed duty to our statements deck be note not materially of undertake do on website. our due found in and

now It's my to call over turn the pleasure Chuck. to

Chuck Magro

deliver we last at we over growth remain XXXX, Good Day This by the points to everyone to basis anticipated driven year improvement translating of another September. deliver as In continued Corteva and margin is significant growth demand XXX proprietary half track targets Investor morning, EBITDA Kim. first to and laid financial with XXXX Thanks, and thank us. you technology. for Corteva's out joining of of the for strong expansion on top operating margin bottom-line

called corn. America offset organic XXX expansion from performance gains higher input is be operating higher in corn of year, half the points pricing terrific the Seed North actions, basis sales margin costs. and which with a only double-digit of about acres in and first can of continues what EBITDA benefiting both

Seed the our market and revenue U.S., the provide. in customers the value growth half share the Our saw remains of In double-digit in recognize Pioneer products Brevant year strong. as first

are to This market. Enlist year, by soybean We in EX expect one to technology recognized the be EX U.S. U.S. number on XX% soybean see least pleased and selling the at EX acres is Enlist the beans of XXXX. in we

PowerCore control, combination the available brands of creates Enlist Further farmers position enhances leading strengthening herbicide for strong insect new with technology in as well flexibility Advanced corn, XXXX, launched and of added aboveground industry-leading tolerance our the advanced this seed opportunities. out-licensing for with our along portfolio, providing farmers genetics we RA as [indiscernible] to

yields. and crop Protection, to invest farmers in products to Crop enhance protect In continue

are believe purchasing the to availability, working customers However, combination is environment. A distributors interest adjusting and capital of macroeconomic reflect patterns factors to from motivating supply to to including their retailers buyers, they adjust management, their rates their these and closer a result end could timing chain supply persist of least see XXXX. the of at intended as the actions to use. to through of purchases be rebalancing We

and and Our productivity on as Crop delivering pricing our is strategy, by focusing remains within well our our The for on portfolio control. on executing Protection business levers resilient new including technologies team actions. differentiated as

sustainable while that not differentiated journey recent new the its to with This pipeline our regulatory introducing farmer. XXXX. organisms track targets to kind And of are of building business, reflects organisms Biologicals acquisitions of of on selective continued deliver launch Reklemel the EBITDA is made Active our have We excellent a our pending we advance harmful soil. $XX the AIs in in of later million this This beneficial of new approval. which expected impacting including nematocide global the the tools continue integration year, to first progress on

positive. Agriculture remain fundamentals

adjusting in and to laser-focused reflect Our environment, the we high net X% executing guided the on demand At what driven in about sales versus growth be time, we current products by muted destocks. Crop as are becoming our we year are down industry same the to our full of continue Protection more strategy efficient. channel guidance the sales by quarter midpoint and last

mix, the reducing modestly actions. and cost guidance, also reduction our strength reflecting are of We of offset revenue EBITDA midpoint product XXXX royalty by partially the reductions

Commodity Now, the yields row, forecasted the the expected estimates trend keep year in Ukraine to a feed market prices continued Brazil, build currently for and on below to crop even down given ending are profitable XXXX the levels. stocks which line may to are for in remain with USDA below prices. food, biofuels expected in put record to let's oilseeds from and of have The with outlook. war recent third expected on along be prices yields, are trend but pressure still U.S. averages. Russia's and turn above U.S. Recent demand for highs be the grains production for to at impact historical projected

protect view seeing increase strong in technology we will see investing We're protection to In The C farm This, with less a expectation areas. for favorable world reduced and overall their recipe demand demand income At to crops our continue more those day, again for environmental crop XXXX. is and genetics the for the differentiated the inputs. produce impact. are yields. end top-tier incentivized we Biofuels biofuels will our farmers hit land Biologicals needs is and and grow believe, in with we're the a record this environment, this of that for demand to in Therefore, solutions. and XXXX and more a

year be invest a their profitability. in planted technology U.S. allowing acres Americas, record for and the XXXX, the to is to net in proven in also estimated X record particularly farmers, XXXX on top to Following in income, farm expand safeguard

expecting buying we we When in we to patterns, reliability as in by order May, chain Latin 'XX rates, pre-'XX. Now, were detail. let's as well driven of to in particularly the supply Crop you patterns improvements in in the at spoke look half in more second early take a America, closer interest higher to change a look market Protection where highlighted

We to also Pacific Latin elevated Asia hotspots noted conditions. and in drought wet due channel inventories, insecticides fungicides in due America of weather-driven X to

became and pullback to was time Brazil in destocking Order levels in out focus the in in to the inventory What patterns. approach. is has America. the the This combination clear closer latter more part orders second orders the that of America. shift quarter events year just-in-time are America North resulted late we'd to in at expect on historical Latin continued most included of on second updated has a based guidance, Latin of in by this pronounced of followed to North the which second where quarter them caused our We've books to in be America, in volume half push a

to continue in farmers to drive backdrop, productivity this farm. Against invest technology at the top-tier

and of Corteva's industry-wide For apart focus strategic through we sets more perspective, get destocking we allowed believe have these peers. to to decisions makes the and us us and operational sustainable year renewed dynamic able solutions channel and better crop from our made lead differentiated our efficient protection market ahead last on us conditions. The

drive strengthening and R&D advance in growth. We our continue investing strategy by to our portfolio sustainable strong, to

differentiated provides creation control. value XXXX targets Our technology with levers confidence in first clear our half for performance within demand our and our largely continued

over the turn me to let now, And Dave. call

Dave Anderson

Thanks, and everyone, welcome, call. Chuck to the

start on for quarter half. Slide which the the X results Let's provides and financial

said against Chuck numbers, from quickly we market evolving As see solid first and conditions. can half you the had a

offset from an down the combined were approximate sales organic quarter, and portfolio compared exit and million in the headwind declines actions were by gains by which Crop pricing with on Volumes $XXX more touching than prior represent segments Protection. the X% impacted Briefly volume year Russia in quarter. in to strategic both

addition, America to basis availability, the weather, growth, purchases saw translated and actions customer In in and supply earnings X% ongoing top product and Despite XXX line America. margin and growth in rates of due and of again, reduction expansion. productivity interest we North points nearly Latin improved mix cost particularly delayed higher to

nearly Seed X%, exit X% portfolio more exits. by broad-based strategic to billion grew down with gains. Pricing, a X%. headwind for Protection of basis top XX% of half, and Russia XXX on margin both prior higher volumes includes Now which year, than Organic expansion. increase headwinds, with Crop decision from in than Global productivity $X versus driving Protection. costs the pricing currency execution were The an X% mix EBITDA driven points more focusing pricing with input line and translated strong Seed Crop and volumes and up volume was half. the the into offset product XX% of operating largely sales performance favorable down

up in offset gains driven corn fewer X XX% the net Seed first prior were Volume acres planted volumes total down Protection as Latin $X.X Seed X% growth for the a offset price the compared the X, value than seasonal on input pricing down offset higher area, shifts. how in Slide every by volumes from Pacific to by costs. of importantly, to the of see X% by Gains And America were corn headwinds performance prior to in our half driven up we from the lower sales strong price than America sales business execution timing were you in increased let's EMEA half led continue with plannings due and acres. Russia So can versus seed with for and Asia in EMEA. Seed X% North Global Seed America delayed region, Russia year. and go first was represented billion. and also declines the strategy Organic exit X% the to also the year. headwind more market sales segment. and more for months North for soybean exit company price up X% were where Crop

gains the $XXX was portfolio from as Protection the were prior down materials lower pricing well compared that globally Protection billion. to offset to value Crop Russia. to down for Chuck EMEA. more X% as sales impacted referenced patterns up roughly were for actions reflecting X% Protection Crop half in X% differentiated the Organic order down as by our pricing versus Crop strategic well were as half from $X.X currency offset exit by net volumes technology the raw than in shift of volume. the well sales more pricing for higher prior for with headwind Global first than million and as as year XX% year, half, the impacts

and strength Biologicals March in other. the our and back, Currency Taking which was nature on driven is $XXX deals Protection portfolio. the closed the complementary in headwind half European step by on million we and And finally, added since acquisitions portfolio early of in both revenue performance showcases a Seed currencies. Crop diverse reflected of the X%, the first largely

go half that, for Slide summary With X, the a of let's to first EBITDA. operating

more cost expense million net nearly increased costs related billion, up You of unfavorable protection can higher were inflation. sold raw under million year to the pricing $XXX with as cost product more productivity volume than headwind costs royalty and operating see $XXX offset of and $X approximately declines and currency and productivity mix, Enlist. costs and actions well were X% the in seed versus in of in coupled EBITDA just as through to market-driven in with we benefit commodity of took a Crop the And towards as income about yield inventory. than a continued by was in headwinds. the improvement increased we neutrality driven $XXX Protection crop royalty cost and royalty material cost impact other The the savings. and million total, journey by million decrease royalty $XXX higher significant mitigated step headwinds net from cost In penetration expense prior combined

versus half acquisitions. the the spend the reflects of from $XX in flat of It about approximately in year SG&A million inclusion prior was SG&A year. first the Biologicals

SG&A acquisitions, down the with up we by support to and European Investment is as increases the roughly the in aligned targeted the actions. in gains prior cost and $XX the $XXX in again, Portfolio ag technology. currencies. contributed R&D versus maintain execution year $XX half disciplined excluding primarily was So position million for spend acquisitions was Currency half, were spending a on million which our of EBITDA. Biologicals driven driven leading headwind, other by million

roughly Biologicals [ph] for expect sales now acquisitions. at range We $XX.X XX. of Turning segment. the driven be This Slide the or midpoint, than the Crop $XXX with year And to the full North take $XX.X want billion X% previous to to by sales lower through billion you now the to guide, approximately net $XXX million from Latin million in America we and growth guide. Crop the is I consistent net prior America expect largely of Protection. Protection

XX% to to product and line be by the royalty greater-than-expected is is improved expense $X.XX guidance now by range cost at benefits billion mix from prior lower The as of the $X.X driven versus partially EBITDA billion, year net updated actions. in the midpoint. expected Operating well top offset growth, as productivity and growth reduced

Importantly, we guidance year XX.X% strength in now Crop and margin Seed Seed first than at both mix, Protection. Crop the and more or the product of midpoint EBITDA the over Protection's of points basis of improved with performance in expansion of expect operating XXX prior margin with growth half

tax earnings an year effective $X.XX offset Operating count. be $X.XX at EPS and of to versus midpoint. a in reflects share lower expected change lower per by of to share, the in rate forecasted The lower is range prior the also the partially increase X% guidance

important third and timing. in more between consistent second America to to of quarters. in be all we nearly This it's Biologicals patterns to of point the result timing order the quarter. to delivered that Again, coupled the fourth patterns the acquisitions, in our out with the of earnings earnings half expected seasonal with is Latin fourth expect Now allocation be historical sales,

now forecasted flow cash $X.X billion. is range Free $X of to the be to in billion

the the expect half. increase consistent that share And we $XXX announced X% strategy. be million the the to recently a course, million we $XXX completed in year, approximately growth We of for with repurchases dividend dividend in first including

disciplined and $X.X and a of framework financial XX% introduced creation slide we reflects the want The including I shareholders. performance low-margin greater driving for net guidance, we're revising we're confident to is Investor while targets. delivering year's also XXXX deliver XXXX expense we products, also XXXX. to EBITDA margin expansion to value R&D royalty importantly, earnings included presented Execution cumulative margin commodity revenue cost guidance XX, Day the strategic XXXX decisions at of today's our XXXX last investment. on the while EBITDA we're targets remind at value billion includes while you, a track our and $XXX on in those exiting targets reduction our and million deliver Slide increased financial to performance accelerate midpoint. that or On operating enabling actions And it This

Crop takeaways. believe macro believe from the proof market some remain Corteva level year Again, Slide to earnings others ag despite demand level the us industry. XXXX. and despite to strength summarize at significant we're With trends continued and is We experiencing. believe that, positioned revised Protection stable the let's the that XX performance go headwinds and industry-wide with our farm key is market fundamentals we positive portfolio this relative We pullback guide the sales the destocking is differentiates growth our of and the full in well in and of

supports performance grow. and able expected we're execute our confidence our XXXX XXXX and finally, targets that And provides to us financial

Kim. to over it turn me let that, with And

Kim Booth

Thanks, Dave.

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

Operator

from our Instructions] Vincent Morgan take [Operator We'll first Andrews question from Stanley.

Vincent Andrews

about and new the bridge top going 'XX reiteration chemical the right growth words, could 'XX In of the other segment 'XX with lower and versus, to algorithm Or still 'XX be With ago you I what's it's make what's of obviously, to let changed now, the algorithm targets guess, through is the and at end more the help the you than on EBITDA, guidance the 'XX? zone? crop a up or maybe changed the get sort us by complexity line, target more revenue the less of little of 'XX? that productivity? likely in just year going 'XX into today it a you're between to that that Or the now and market

Chuck Magro

about yes, so a talk couple Dave thoughts a give let over specifics. turn to me I'll you to it bit Vincent, then of and the

don't look, -- changed. we lot whole think has So a

with faster destocking, expected. certainly this lot larger a obviously, -- think and a think the about and sustainable. and anyone issue happened happened than channel situation came what's was we you temporary do is the But up industry-wide that it it's If it it not

September. the we XXXX, we when do think laid that for we about were in plans your and we is the our journey on lot of And when then question, start we So what XXXX a as thinking that thinking times same before, back to now within couple well we've this control. own out if about to you we're of a trajectory start have deliver, this communicated

the strategy trying the we're reshape of company. what so to and do is overall the portfolio And

do So the been some to of what last same working 'XX in on need the we're is things we've going years. X that 'XX and to for

So so of we well to example, to continue by expecting are for the pretty held [indiscernible] far We're up through the product year. new rest growth and we're grow. the and exits products year. end CP about They actually in our XXXX XX% the through expecting, complete this country our of in and

So we'll finish X those in years. the next

in running indicate royalty already a lower little morning's had expenses did that our are We than expected. this we call

So million for and to $XXX by we're about on XXXX. of we expense million previously the now $XXX had thought track reduction, million well $XXX closer

the seeing we're early too and talk little things some that other it's a about to think I the of specifics.

revenue. of give we XXXX to in how some lower costs things. to now to too the to We're expecting XXXX, in to continue through about certainly thinking We Seed P&L. specifics through we're offset and invest because I'd sort it's going planning are that's be targeting some but are of flow CP through say and both X% early There's R&D.

be that basically think about We year. that's put this think that one low now into could certainly, confident channel in. we're very very be -- we've when pockets the out, top you feel we're in should it or next issue end the the us same I that happening right destocking I end. talk year. all comfortable a we'll behind together, move path that laid of So on portion But framework of don't we significant There behind will think, be still is I this the this

to anything add? Dave,

Dave Anderson

think quick couple couple a points, -- Vincent. just Just of a I maybe

Crop year. obviously, first that said, we're Chuck as Protection and on EBITDA performance, very business margin volume what experiencing think, this good I of the headwind despite is seeing on the margin -- all, we're

So it's our and related taken management portfolio will, Crop performance upgrade, the the businesses, and but have a shifts place also and real our quality cost Protection and seed tribute that obviously, the business. in the technology differentiation and the strengthening of technology delivery to to you cost in if the enhanced refinements the the

really, working. delivery the in it's the that and formula, it's volume of volume, margin despite that's rate despite So anything, headwind. I if And terms think, EBITDA that working faster again, the

the -- So to now obviously our you all won't we'll It's be And of be before long XXXX. updating will proceed it March for about be we'll forward this. with XXXX. guide talking

helps. now quite and time. our see through. terms said, we're we've in constructive, of But going to fundamentals way an Chuck what quite in to its Hopefully, margin That's as terms as It's in of continued acceleration channel the through, cost that seen work of terms we setup performance overall this forward what to take in of again, obviously, our we inventory with, right going XXXX. look is work remains outlook positive positive and when now, destocking particularly performance. issue But phenomenon in the our going correction, an this industry, right

Operator

from comes Bank. next Our Begleiter Deutsche question from David

David Begleiter

August? think? you're destocking pass the you to or what and May, seeing of destocking, the Protection the -- Chuck, cadence on Crop destocking, the the expecting talk you can Are we of do June now or peak close in in and July to

Chuck Magro

David.

came So how It that look, quickly. became it thinking industry we up on pockets. were sort pretty about terms this of of the clear very in

you're systemic really recall there set that clear last were seeing, we right? has actually some consistent industry single-digit line that we it's sight May, I'd channel. talking areas it very, were and knew the X on-farm seeing of one for and talking good end talking Pacific at inventories, pockets we're you If more was of a to stage, just the this what been into leaves weather-driven. higher is end it that And of thing about broad-based. organic say, of goes And the pretty the that and at point, channel to at about were And has that low became over that quarter, very we're what positive. the is of Asia the demand when By last what X The so data years revenue. LatAm we the that growth

that May, good overall and you So we're the time we May to and happened the need imagine, they're can that's their the they've -- because feeling spent has significant at pullback had fundamentals, there a But to they the products by too lot this have applying of since very crop and news we is that looking farmers yield. since but health drive the what is of channel very much preserve inventory. end a been good

be that what We're is product the get partners. planning so this of mean year, I'd we're of end geographies we We behind we're through going doesn't that channel some and us. this XXXX. comes of with expecting it time be to the most our and -- woods XXXX that. understand There's going we're that will some But when work lines that to for probably will it now that to that. into And out say persist the by

America in right? rates the But They the plus, community fidelity But have the wasn't used, very we're higher are Where is North say where channel I'd chains time. interest there just America, higher supply with that a product the the that also move and farming industry comfortable in sophisticated. just especially the these back in got to delivered an high be overall, is also was perspective. Latin but the really quite can industry operated of what specifically, cost I think finding way pre-XXXX, it clearly inventory capital,

to we're that. see So going

that's going QX. constructive Dave will that happen QX in I around But the to why not we're between XXXX. the of see earnings you're QX, unfortunately, especially and that sort say So about seasonality, split communicated is what wouldn't

setup still to pretty us to XXXX The good. looks be

got oilseeds. demand for record You've grains and

record have record there'll biofuels think demand in be 'XX. We You 'XX. for another in

-- still about, healthy haven't a come talked prices we behavior they're terms change in. we But be As would it there products crop carryover in that and but going be seen buying the really in are Certainly of down have the possible terms margins there's destocking in possible. XXXX? first part of farmer investing some is in the of in to 'XX, that's that entirely

Operator

We'll Vertical McCarthy Partners. take from our Kevin next question from Research

Kevin McCarthy

Yes.

Just onion peel more the to bit the destocking. a Protection little on Crop

will or you end do level more the in you a year a And think mainly XQ in you of kind that at both? cadence? excess comment just Obviously, effects world, terms the that your speak there's the question. planning made but earnings I quarter. related to in I earnings have current XQ, think you would of even grower level Can guess distributor lot view. or a normal seasonal As wondering survey destock a user be you maybe affect the fourth the how the of

Chuck Magro

in me split, say, the an issue this inventory then Dave, please? our QX or I'd cover you is let question where and the channel. the take the on mostly can Kevin, QX, belief Look, is,

there It storage speaking, of farm. major would broadly retail I where you're is inventory surplus to say, from is to So the on-farm the around depends isn't but talking -- in storage needs and distributor on where markets. where our in on-farm the the it's lot a move it channel

there you at If the a so on-farm would be not storage. lot look [indiscernible], typically of

that is issue believe we an inventory channel. the clearly this in So

absolutely. totes if I happened what get back ordered typically the did or reliability of supply. But be center, were take on more I front needed they you farmers And just chain channel issues some Could you supply there step wouldn't is than product. to ensure think that farm? think the when and right? Yes, how [ph] leftover and clearly we about I think the here, think

confident we're it is So pretty And it moving where we know that is. out.

We there's been last progress think made a in the can I months. it in lot of data. the see few

heading we're right optimistic in this direction. so And the that is

want you and Dave, QX? QX to about talk

Dave Anderson

I the could QX in conversation maybe way QX. that, And sure. and start Sure, start Kevin, the

little in what's about perspective. talk maybe you of sort to the for terms give So -- just half, implied just half the a bit of guide some

that the the midpoint basis revenue imply on a to of of a billion would So our year-over-year $XXX revenue [ph], increase guide, $XX.X million.

at it when our you look importantly, that, Biological Now includes acquisitions.

there's about million coming that a as $XXX the So $XXX of million of result about acquisitions. that's

And very On last half what's million. the about it's was [indiscernible] implied, $XXX actual EBITDA, numbers, year for the $XXX year This the our million. second million. again, $XX acquisition about importantly, Biologicals represents

If you EBITDA, we've that million for to given guide number half. full in a $XX that look year at contribution the $XX second $XX million is Biologicals you first half, million the in

what's for in the in assumed that's some on perspective you will, the here, assumed giving half. just mind terms second if in that keep kind of of So growth

from specifically when quarter, the back first our in Seed fourth business and looking associated XH Protection XH [ph] distribution half to and business, Seed for second acquisition significance the do And May, other that the that the Crop then that second will terms the Robert's of playing LatAm then the the really from to in recalibration really we with got We've your half normal and mostly business the which the is and reason half, has Now to its business, other second are the fourth The really at, XQ quarter half with -- fourth focused in to you the again, really now LatAm, question terms out. both timing of timing for for you're really Brazil. to XQ acquisition with and a is communicated our big XQ, of on in that that's component contributions. it be quarter. look XQ, more acquisition contributions insights on now Stoller in of of really at total,

XXXX 'XX is If Latin [ph], was of really it XXXX historically, compared back go terms to particularly we to atypical America. but it's experienced not you XXXX that it pattern the distribution different -- at distribution, when in the in you look anomalous than

Operator

next Parkinson Our comes Chris from question from Mizuho.

Christopher Parkinson

Great.

those thinking the we're beginning as XXXX think lower about in of variables in they're we're or a about a as looks As have you you all inputs line -- net perhaps just which costs to thinking your EX when royalty like bit. how CPC better we're [indiscernible] penetration, easing payments hit on Can a to some directly control. few of well little certified about growers, reductions, cases, based few on presumably on sight or,

So taking when give processes on approaching considering the initial that of ourselves again, of can just thought be should volume you we're XXXX? us side we how price once kind outside some of just it,

Chuck Magro

Yes. Chris, to of talk XXXX. so time about look, lots

planning really our But just haven't it, give the sort to sessions started way directional thinking you about thoughts. of yet. the We we're detailed

U.S., as looks the still, to but some of we're going right stocks going come won't that First, pretty setup to the size a rebalancing record ag be be market I still we're farmers have conditions. of constructive healthy got in we year. years. just world. top We've around off X X have historical above think mentioned. crop with a the I've record average the Brazil relative tight to least think, going pricing. They but We year Obviously, at still now, the it's think in This

for So then I as already, feed the strong oilseeds, very and and And very grains setup mentioned demand food, constructive. fuel. is

we've the expansion, you growth that place we what's And the that with consistent of year about and at sort levers very bottom margin think of line the Corteva, backdrop, is you that same see another when XXXX happening talked levers then framework. the about. are So of

our our expect new in new products, see products. significant protection So we're growth to to going see and crop we

last the finalized you we As spinosad recall, year, expansion.

costs obviously, then through crop the going unpack are are on see the thing need And that growth we see incremental with further million they in we'll and probably flow today to seeing this the and expenses start a volume overall XXXX but and market go already we're we the prices into side, XXXX. to by little chemical So to to see mentioned get way ahead P&L. material but raw little lower I the trending XXXX. year royalty a the plan of to in $XXX we're

similar is the any So so historically, I sort so that thinking. early we of we've looks deviations construct But It see XXXX far, for what put initial this just we what what I'll major quite caution constructive. from out our is communicated. together, to days, all when looks say very, we've you we the setup laid this is don't think, that would

Operator

Our from Joel next Capital Markets. question comes BMO from Jackson

Joel Jackson

of dropped might next us year? a hundred way of maybe Can I'm crop then to reiterate improve you to Can in hoping maybe you or volume throw free how projecting little flow just for a what flow you of year. in so. you half find what's formats And free get you there the not know couple it to chems on if million XX% and were you just the just over some us you're I'll this on increase sure next over an cash dollars plus number while? that. together. give update cash conversion, year-over-year, like I couple conversion, be going growth second the tell expect to Dave, year then the on questions

Dave Anderson

Sure.

you Let me crop numbers. give the

volume down when into numbers it's round be change consideration it's to crop reported have consider for numbers, the for So a XX% to basis, business really the a would about really to minus that on good that strategic when take you made the but because you decisions our the half XX% at we've get just you -- product look put really the exits, first point into just perspective, exit.

of So adjusted second store you it. a got reported on look a basis, half, first X% When is what but of about at way, at there's about points on change from acquisition by the volume looking the you're those decisions. includes we've an and basis in in half impact also the X Joel this there the --

So X%. all-in would at -- sort all this of up look when in, it an is it you be

XH to research of So Brazil, in a XQ seeing other is that's addition we're to what and XQ we're XH in going if pretty in you inventory data, improvement terms in gate. strength the we're sequentially words, channel, in farm the to product good some will, LatAm actual to transference -- specifically, at seeing the seeing sellout, at look overall significantly looking is that you market we're growth when sequentially for really from of levels

the of LatAm. the related what essentially, terms to So we're the seeing half improvement of in second timing is in

Chuck Magro

Yes.

talk Dave Just way way we the the one [ph]. about Joel, about free comment that think before you flow. glyphosate described cash is excluding has the market

So market out. call sort it's market volumes just referenced you such our [ph], of a against a such to Dave very exclude market, important call out when glyphosate and a commodity to because backdrop, we the need it's don't play large in that that that

So cash Dave, on free you over to flow.

Dave Anderson

Yes.

kind of cash the cash in through forward. of quickly, very conversion terms go go going then and question terms your of just to specifically directionally, we numbers and flow what flow just see of do in a So couple

growers So to first payables working and year-over-year more use had seed including half, of do the growth to as the pointed business, side cash actions. for the phenomena costs payables size commodity pricing of cash outflow of our on the as the of basis. really business capital the explainable you higher comp related in on terms which out, and the has by a the all with as we've That's is of well

protection we're other in attributable procurement is payables inventory of to business, doing trade On management, of the really terms very understandably the where back, payables is really pulling the of crop which in on side there. we're side what the terms of obviously,

translates growing translates we're $X.X way, communicate in conversion say, a to, conversion the the a coming the working also cash midpoint, really full year, payables. that which about year-over-year levels really cash EBITDA let's the attributable EPS earnings our relationship, our fact calculation to about holding inventory look is the but in conversion the in the to what's words, holding our using and billion EBITDA a $X.X happening of to a obviously, half $X.X full really at down, When first against constant of at but the XX% working at about billion billion capital operating source midpoint from XX% the of to which, EBITDA terms to of on $X half guide numerator increasing For it's basically other a terms billion our if is year, cash you by use XX% to for at our of -- levels conversion. of basis, the it's in you capital is becomes another -- second way year, calculate

We've XXXX, flow something sort When terms XX% plus the relationship translate again, numbers, plus if neighborhood of be the 'XX would XX% when with And out for these years, disciplines, our And terms those think consistent earnings our targets you dialed of in cetera. terms capabilities, the think, that's of looking would that to X in you look look a at, operating 'XX. cash in. we the in of and outlook, 'XX, got, you and again right of -- earlier we referenced all periods. it's in relative conversion, confidence around cash what we our to at 'XX for what directional earnings of for XXXX in cash-to-EBITDA to et

Operator

I'll take Research. Frank next Mitsch question from Xerium from our

Frank Mitsch

mark. and obviously things to focus EX getting wanted performance clearly I was in or Enlist of that the congrats side EX XX% Seed impressive because to the on on

share So you're on side. the clearly soybean gaining

on that? behind Can overall pretty market about the corn And factors are of share was your talk you Your impressive. feelings underlying some what gains? also growth, XX%

Tim Glenn

Yes, the turned the out. year how I appreciate and success Frank. comments on Enlist

a in share, few So of terms market here. thoughts maybe

little customer -- like had little corn obviously, we we slower farmers' -- was order knew we towards year, was a there in as intentions bit and good level momentum as felt So the we terms definitely could soy went sense a felt of we we order activity shifted that bit. and see and came through

time USDA I million sit soybeans of on included, right I the was At something there and what planted. think about planted still X-plus order here early to very another. of million way one XX still the that farmers X would of of from report we north to is As or corn be say now, was declare acres to the June be acres

So We to those USDA over the there time. be it the door revise know revisions. opens for will

capture acres now So very call strong value on given but be XX-plus at a corn. acres on where on and current million million area. we're at obviously XX-plus share We'd at it, that's the of at the level soy with the corn slight right gain looking

of -- acres. stronger a have XX-plus bit In It's a more we're position share gain million comfortable our I at bit would soy, said the terms again, throughout quite a actually felt with order of year. I that little

good kind revises it material from from numbers. share outstanding. this share We're going those that So levels. look good we about at over there's months. but made adjustments And satisfied that in the the look the that out. not at coming If here was volume are we right standpoint, where made continue that to how turned sit. the victory standpoint, how final of We're time year But feel a capture we USDA -- Clearly, at to could point going to summarizes we now. feel as a declare value very about impact

Operator

from We'll our question from Jeff take Zekauskas JPMorgan. next

Jeff Zekauskas

for overall our you XXXX in XXXX pricing XXXX? Seed Do assume guide. Reach positive EBITDA and

Chuck Magro

David, you hear the question?

Dave Anderson

financial seed 'XX, pricing be, Yes. yes. Yes, our answer Jeff would positive Jeff, 'XX to the assume [indiscernible]? say business we Sorry, in do targets? you relative did the

Jeff Zekauskas

In order to them. reach

Dave Anderson

saying that of we're will and be business, is assumptions it going price pricing to for again way versus Seed that cost to think value margins. Another that accretive we

Chuck Magro

Chuck. Yes, Jeff, it's

to Dave So communicated before, hit price this it Seed I but is the think value. we've way is for price try right, for we

We big have a We're new R&D year. every bringing out machine. hybrids

we've our If for but our our looked recent you as packages. we some I trade what of actually remarks called announced prepared well. brought next-gen out in also at Seed announcements, out also call we PowerCore

little this of maybe, Tim, be generation. be are also going there. progress it a And does and price lot trade that value some that Enlist. to technology. about even for helps creation a can very I'd to that. bit new out-license door Significant with for the it certainly say seen are And is up will us important opens talk for next it the the these packages we'll you in farmers what So we've

Tim Glenn

constantly really hybrids our and licensing metric that door We're the that products Yes, when And exciting -- Chuck said, absolutely. value we new in. we lineup out-license David opens is and Jeff, say varieties it's more And I'd about getting pricing that to as the or traditional think for bring about 'XX and the into us bring back way new where about 'XX to in more think that bringing opportunity. you it's price.

So just licensing that today, And got we in the to sit as X participate X from years ago, we standpoint. license we've able here really didn't a we're traits marketplace.

that that the out So in year shifted have And our are the proprietary we're just accessible. sudden, Enlist door for the making nice that this XXX own as up of into trade there our [ph] we've all into got licensing. EX, germplasm shift are significant a licensees opens gains made us not [indiscernible] proprietary we but to today

EX in own Enlist So in our Corteva germplasm. soybeans

we've aboveground, Latin couple we're EX got in Conkesta In proprietary being but breeding that segment America into [ph] got out the most means Latin there America, talked corn a marketplace we've years Chuck germplasm to introducing varieties Refuge is and with what soybeans. there. largest again, that And successful the integrated organization refuge. of about from That protection the in of PowerCore that Enlist is the North Advance us. our America insect

and with there trade [ph]. we have to our sudden, a go the participate of opportunity all So out

smaller canola investment have again, not canola and leverage returns -- the which in scale, go out on our got be generate there same again, that allows approval other we the on for, then able not we those that scale in that to optimally to as good market. opportunities. on technology But and And it like again, us

business So our out-licensing it's standpoint the in brands. ongoing an exciting to time from an in addition

Dave Anderson

is And this -- Jeff, just Dave.

to Just just said I one final comment earlier. to what add

as you early the place of pricing have most taken Day pricing Just as Investor seed that through our a year, recall reminder this XXXX. will last from the communications and as

just relative of of a So reminder significance terms of forward years. kind in a those that's

Operator

Steve from question next our take Byrne from of Bank America. We'll

Steve Byrne

pricing you is higher-yielding genetics Can the more you share of had questions. ahead has Did pull of XXXX? that pull mix couple for shift net because then in $XXX to That Did penetrated And pricing million than the that then was lastly, you like-for-like acreage do corn. growers of that the that And from way? or view you're Europeans royalty gain I'd you if reduction XX% the the soy value some rule of seeds? gene the adopt guide. to Yes. split versus from your the editing that to then on of that Seed maybe target getting thought? shift forward fraction you of million, like Seed, being underlying you their just A Enlist faster to hear the shifting what that and other some in the $XXX bucket XX% for

Tim Glenn

today. Okay. A hear to lot good and there and Steve from start shot I'll you a to take off,

So is seed we it upgraded I Enlist of sales in The 'XX you would had our benefit at of say, North between look when the terms germplasm. corn pricing, overall. And in it pricing a you and our about strong very more fair than proprietary would to soy. been amount soy, how soy, America, corn think we obviously, have by driven

give performing side. the opened so on So us pricing series A opportunities more it higher for that door products, opportunity, more varieties our

and mix, terms performance was it new out varieties of the value in combination well So flat you pricing products, of board. about just want for think as if a to pricing across as it new

mix and corn a So soy [ph]. good on both

year, about here. neutrality, track if that want we've $XXX things The you royalty think of was for million it, terms of by between In 'XX. driven overperformance, we're that couple 'XX -- reduction on I and talked our, about a call to guess, the this

up overdelivered a of our a thing U.S. versus of a of couple our We higher business side extend. mix Enlist business we ended you that on level kind First with fronts, the and of Enlist is will, standpoint. if on from

at [indiscernible]. little a planned we That's had now bit for. we're than So about higher what

for the proprietary on our addition, that our germplasm higher, Enlist. adoption terms was proprietary In little of a in we're over is what of side XX% germplasm

So all those a call to, little bit us it, things coupled faster. allow to convert

years. in the over to few -- to we're is be So in here going we're end, -- converted fully next it going the

to an wanted you XXXX. can around fact gene the we So think Chuck this it overperformed editing. into And of I year, think acceleration that as question take the

Chuck Magro

question and gene editing happening Europe. great Steve, what's in Yes, on

set stage. to the all, of just First

of potential more So is development set to years that has of we and of be agricultural crop believe very science, the Seed [ph] than impactful ago. sort to level and next that gene BT XX powerful was development editing tools

clarity program a that very proposed I space It's on this specifics the take is for think, the in I'd a good X increasing So got I through we're some investment -- would and policy a R&D. years. of full-on early line, we they're to excited. our It's are next are that came X going get July, we EU say R&D time framework, start. say, industry. time the is out what in to have the workable a hopefully, where in, to to a We've The and policy

that is far, landscape the world. to so relatively around rest But a we connected of the the framework what see is policy

X what the So into to be when products gene market hoping says editing these we're to that able that the so X tools. and have in putting is products we we will whole freedom to we'll are operate years that in of ready and next can we actively investing ground. a the be suite start

overall And a So future first a step. we exciting it our good that I part in very of what development. saw Europe think was is very

Operator

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

Arun Viswanathan

could you there restructuring program planning relatively that Is you there or in looks 'XX. a lot a 'XX there's imply ratable X.X with? Are pricing. buckets way us about with I through to could you're any growth 'XX. of bucket like EBITDA we in that? major So could in going out had [ph] that kind know I X.X and But I would us the the trajectory kind that X.X midpoint question understand any maybe that gains, still from that and a that? by to think help about of from market growth how the should or process. It going growth reduction, help say, uncertainty and you -- XX% royalty of 'XX

Dave Anderson

will important this, also give follows, to installment around components for to you're us that us a early for would more the and I for asking first that's say be of obviously, a color lot about. specifics and all, going us very on detail Arun, of and or again, it's component comment XXXX

I think benefit us million, of were to that. get were only lower greater as net from business -- on the and Protection think Crop is the where way way we to walk, I the XXXX about provided. the the or something think just we provided ones mentioned. that, think XX% creation bridge the you buckets said We in margin it said seed products. side, we articulated if product That's I royalties driven by of same to with And greater going back than about Enlist. it's royalty lift it be neutrality, from going will, mix, coming Crop that going $XXX Investor Day, We also we for Protection again, it's it's value the seed our going differentiated a framework. to And have Tim to than not but you The revenue the in called that we the and forward.

north year translating on is for despite apples-to-apples XXXX savings. by a, full million it, talked on excluding of we $XXX that to a acquisitions what way, million about of SG&A be just to other words, and basis, plug in in down into going despite And In a call inflation. we're put inflation, the $XX merit on basis. a

So that's to doing testimony front. what that fairly we're significant a on

both cited from for of of very said, much still excellence So R&D on investment, Chuck more revenue operational of you then if cost backdrop, increased of against the to revenue. come, obviously, committed XXXX. And target will, their, businesses terms in -- our that and as Chuck then to the X%

very are same there the those today that So much. building are blocks

seeing first for of I you're guide our think really what and that. reinforce results in the for half our XXXX terms

So we to as come 'XX you and our guide a lot color, and to later. out develop detail on a plan lot that flesh more that more again, communicate

Operator

Booth any call Ms. And I'd to for now back turn like closing to remarks. the over

Kim Booth

you. Thank

that wonderful call. We your in you hope for day. have safe and interest today's a concludes you and thank So Corteva. for joining We

Operator

appreciate your day. Thank ladies conference. a gentlemen, today's And We participation. Have conclude that wonderful and you. does

Corteva (CTVA) 4 Aug 232023 Q2 Earnings call transcript