INDIANAPOLIS, Oct. 27,
2023 /PRNewswire/ -- Corteva, Inc. (NYSE: CTVA)
today provided preliminary net sales and earnings results for the
quarter ended September 2023 and an
update for its expectations for full year 2023 net sales and
earnings. Third quarter net sales are expected to be approximately
$2.6 billion. Third quarter GAAP
income and earnings per share (EPS) from continuing operations are
expected to be a loss of approximately $315
million and $0.45 per share,
respectively. Operating EBITDA1 is expected to be
approximately $18 million for the
period, with Operating EPS1 expected to be a loss of
approximately $0.23 per share.
Management lowered the Company's full year 2023 net sales and
earnings guidance2 in light of evolving market dynamics
in Brazil, including:
- Significant delay in orders due to just-in-time farmer
purchases on both plantings and crop protection applications
- Tighter Brazilian farmer margins largely driven by macro
factors, including inflation, interest and exchange rates, and
record production during the 2022/2023 crop season
- Ongoing channel inventory destocking in Brazil crop chemicals
- Pricing and volume pressures in crop chemicals associated with
elevated generic imports
- Lower fourth quarter seed deliveries impacted by lower Summer
corn planted area and potentially delayed and reduced Safrinha
planted area for the 2023/2024 crop season
"Third quarter results and the performance of our operations
were broadly aligned with expectations around the globe. However,
early fourth quarter indicators from Brazil have caused us to recalibrate sales and
earnings estimates in both Seed and Crop Protection for the
remainder of the year given the significance of Brazil to our fourth quarter business. The
change in order patterns and planted area intentions, together with
additional Crop Protection volume and pricing pressures in
Brazil, is now included in our
updated guidance," said Chuck Magro,
Corteva Chief Executive Officer.
"I am pleased with the EBITDA margin improvement we've delivered
so far this year through strong pricing, product mix improvement,
as well as productivity and cost actions," continued Magro. "We
will discuss early views on our 2024 outlook on our third quarter
earnings call on November 9th.
Meanwhile, we remain committed to $750
million of share repurchases in 2023."
Full year net sales are now expected to be in the range of
$17.0 billion and $17.3 billion, with Operating EBITDA expected to
be in the range of $3.25 billion and
$3.45 billion. Full year 2023
Operating EPS is now expected to be in the range of $2.50 and $2.70 per
share.
The Company is not able to reconcile its forward-looking
non-GAAP financial measures to its most comparable U.S. GAAP
financial measures, as it is unable to predict with reasonable
certainty items outside of its control, such as Significant Items,
without unreasonable effort.
The select financial information provided in this release is
preliminary. As the Company completes its third quarter financial
close process and finalizes its outlook for the remainder of the
year, it is possible that the Company may identify items that
require it to make adjustments to the preliminary financial
information set forth above, and those adjustments could be
material. Furthermore, this update does not present all necessary
information for an understanding of the Company's financial
condition as of the date of this release, or its results of
operations for the third quarter of 2023.
Corteva will release its third quarter 2023 earnings on
Wednesday, November 8, after the
stock market close via PR Newswire and its website. The Company
will host a live webcast of its third quarter 2023 earnings
conference call on Thursday, November 9,
2023, at 9:00 a.m. Eastern
Time.
1. Operating EPS and Operating EBITDA are non-GAAP measures. See
page A-1 for further discussion. 2. The Company does not provide
the most comparable GAAP measure on a forward-looking basis. See
page 3 for further discussion.
About Corteva
Corteva, Inc. (NYSE: CTVA) is a global
pure-play agriculture company that combines industry-leading
innovation, high-touch customer engagement and operational
execution to profitably deliver solutions for the world's most
pressing agriculture challenges. Corteva generates advantaged
market preference through its unique distribution strategy,
together with its balanced and globally diverse mix of seed, crop
protection, and digital products and services. With some of the
most recognized brands in agriculture and a technology pipeline
well positioned to drive growth, the Company is committed to
maximizing productivity for farmers, while working with
stakeholders throughout the food system as it fulfills its promise
to enrich the lives of those who produce and those who consume,
ensuring progress for generations to come. More information can be
found at www.corteva.com.
Cautionary Statement About Forward-Looking Statements
This report contains certain estimates and forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, which are intended to be covered by the
safe harbor provisions for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995, and may be
identified by their use of words like "plans," "expects," "will,"
"anticipates," "believes," "intends," "projects," "estimates,"
"outlook," or other words of similar meaning. All statements that
address expectations or projections about the future, including
statements about Corteva's financial results or outlook; strategy
for growth; product development; regulatory approvals; market
position; capital allocation strategy; liquidity; environmental,
social and governance ("ESG") targets and initiatives; the
anticipated benefits of acquisitions, restructuring actions, or
cost savings initiatives; and the outcome of contingencies, such as
litigation and environmental matters, are forward-looking
statements.
Forward-looking statements and other estimates are based on
certain assumptions and expectations of future events which may not
be accurate or realized. Forward-looking statements and other
estimates also involve risks and uncertainties, many of which are
beyond Corteva's control. While the list of factors presented below
is considered representative, no such list should be considered to
be a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Consequences of
material differences in results as compared with those anticipated
in the forward-looking statements could include, among other
things, business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which
could have a material adverse effect on Corteva's business, results
of operations and financial condition. Some of the important
factors that could cause Corteva's actual results to differ
materially from those projected in any such forward-looking
statements include: (i) failure to successfully develop and
commercialize Corteva's pipeline; (ii) failure to obtain or
maintain the necessary regulatory approvals for some of Corteva's
products; (iii) effect of the degree of public understanding and
acceptance or perceived public acceptance of Corteva's
biotechnology and other agricultural products; (iv) effect of
changes in agricultural and related policies of governments and
international organizations; (v) costs of complying with evolving
regulatory requirements and the effect of actual or
alleged violations of environmental laws or permit
requirements; (vi) effect of climate change and unpredictable
seasonal and weather factors; (vii) failure to comply with
competition and antitrust laws; (viii) effect of competition in
Corteva's industry; (ix) competitor's establishment of an
intermediary platform for distribution of Corteva's products; (x)
impact of Corteva's dependence on third parties with respect to
certain of its raw materials or licenses and commercialization;
(xi) effect of volatility in Corteva's input costs; (xii) risk
related to geopolitical and military conflict; (xiii) effect of
industrial espionage and other disruptions to Corteva's supply
chain, information technology or network systems; (xiv) risks
related to environmental litigation and the indemnification
obligations of legacy EIDP liabilities in connection with the
separation of Corteva; (xv) risks related to Corteva's global
operations; (xvi) failure to effectively manage acquisitions,
divestitures, alliances, restructurings, cost savings initiatives,
and other portfolio actions; (xvii) failure to raise capital
through the capital markets or short-term borrowings on terms
acceptable to Corteva; (xviii) failure of Corteva's customers to
pay their debts to Corteva, including customer financing programs;
(xix) increases in pension and other post-employment benefit plan
funding obligations; (xx) capital markets sentiment towards ESG
matters; (xxi) risks related to pandemics or epidemics; (xxii)
Corteva's intellectual property rights or defense against
intellectual property claims asserted by others; (xxiii) effect of
counterfeit products; (xxiv) Corteva's dependence on intellectual
property cross-license agreements; and (xxv) other risks related to
the Separation from DowDuPont.
Additionally, there may be other risks and uncertainties that
Corteva is unable to currently identify or that Corteva does not
currently expect to have a material impact on its business. Where,
in any forward-looking statement or other estimate, an expectation
or belief as to future results or events is expressed, such
expectation or belief is based on the current plans and
expectations of Corteva's management and expressed in good faith
and believed to have a reasonable basis, but there can be no
assurance that the expectation or belief will result or be achieved
or accomplished. Corteva disclaims and does not undertake any
obligation to update or revise any forward-looking statement,
except as required by applicable law. A detailed discussion of some
of the significant risks and uncertainties which may cause results
and events to differ materially from such forward-looking
statements is included in the "Risk Factors" section of Corteva's
Annual Report on Form 10-K, as modified by subsequent Quarterly
Reports on Forms 10-Q and Current Reports on Form 8-K.
Regulation G (Non-GAAP Financial Measures)
This earnings release includes information that does not conform
to U.S. GAAP and are considered non-GAAP measures. These measures
may include operating EBITDA, operating earnings (loss) per share,
and base income tax rate. Management uses these measures internally
for planning and forecasting, including allocating resources and
evaluating incentive compensation. Management believes that these
non-GAAP measures best reflect the ongoing performance of the
Company during the periods presented and provide more relevant and
meaningful information to investors as they provide insight with
respect to ongoing operating results of the Company and a more
useful comparison of year over year results. These non-GAAP
measures supplement the Company's U.S. GAAP disclosures and should
not be viewed as an alternative to U.S. GAAP measures of
performance. Furthermore, such non-GAAP measures may not be
consistent with similar measures provided or used by other
companies. Reconciliations for these non-GAAP measures to U.S. GAAP
are provided in the Selected Financial Information and Non-GAAP
Measures starting on page A-1 of the Financial Statement
Schedules.
Corteva is not able to reconcile its forward-looking non-GAAP
financial measures to its most comparable U.S. GAAP financial
measures, as it is unable to predict with reasonable certainty
items outside of the Company's control, such as Significant Items,
without unreasonable effort. For Significant items reported in the
periods presented, refer to page A-2 of the Financial Statement
Schedules. Beginning January 1, 2020,
the Company presents accelerated prepaid royalty amortization
expense as a significant item. Accelerated prepaid royalty
amortization represents the non-cash charge associated with the
recognition of upfront payments made to Monsanto in connection with
the Company's non-exclusive license in the United States and Canada for Monsanto's Genuity® Roundup Ready 2
Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
During the ramp-up period of Enlist E3TM, Corteva has
begun to significantly reduce the volume of products with the
Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide
tolerance traits beginning in 2021, with expected minimal use of
the trait platform thereafter.
Operating EBITDA is defined as earnings (loss) (i.e., income
(loss) from continuing operations before income taxes) before
interest, depreciation, amortization, non-operating benefits
(costs), foreign exchange gains (losses), and net unrealized gain
or loss from mark-to-market activity for certain foreign currency
derivative instruments that do not qualify for hedge accounting,
excluding the impact of significant items. Non-operating benefits
(costs) consists of non-operating pension and other post-
employment benefit (OPEB) credits (costs), tax indemnification
adjustments, and environmental remediation and legal costs
associated with legacy businesses and sites. Tax indemnification
adjustments relate to changes in indemnification balances, as a
result of the application of the terms of the Tax Matters
Agreement, between Corteva and Dow and/or DuPont that are recorded
by the Company as pre-tax income or expense.
Operating earnings (loss) per share is defined as "earnings
(loss) per common share from continuing operations - diluted"
excluding the after-tax impact of significant items, the after-tax
impact of non-operating benefits (costs), the after-tax impact of
amortization expense associated with intangible assets existing as
of the Separation from DowDuPont, and the after-tax impact of net
unrealized gain or loss from mark-to-market activity for certain
foreign currency derivative instruments that do not qualify for
hedge accounting. Although amortization of the Company's intangible
assets is excluded from these non-GAAP measures, management
believes it is important for investors to understand that such
intangible assets contribute to revenue generation. Amortization of
intangible assets that relate to past acquisitions will recur in
future periods until such intangible assets have been fully
amortized. Any future acquisitions may result in amortization of
additional intangible assets. Net unrealized gain or loss from
mark-to-market activity for certain foreign currency derivative
instruments that do not qualify for hedge accounting represents the
non-cash net gain (loss) from changes in fair value of certain
undesignated foreign currency derivative contracts. Upon
settlement, which is within the same calendar year of execution of
the contract, the realized gain (loss) from the changes in fair
value of the non-qualified foreign currency derivative contracts
will be reported in the relevant non-GAAP financial measures,
allowing quarterly results to reflect the economic effects of the
foreign currency derivative contracts without the resulting
unrealized mark to fair value volatility. Base income tax rate is
defined as the effective tax rate excluding the impacts of foreign
exchange gains (losses), non-operating benefits (costs),
amortization of intangibles (existing as of the Separation),
mark-to- market gains (losses) on certain foreign currency
contracts not designated as hedges, and significant items.
™ ® ℠ Trademarks and service marks of
Corteva Agriscience and its affiliated companies.
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SOURCE Corteva, Inc.