Attached files
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| EX-99.2 - EX-99.2 - Corteva, Inc. | a33120enr.htm |
| EX-99.1 - EX-99.1 - Corteva, Inc. | a0506201q2020earningsrel.htm |
| 8-K - 8-K - Corteva, Inc. | a331208kenr.htm |
1Q 2020 Earnings Conference Call May 7, 2020
Safe Harbor Regarding Forward-Looking Statements Forward-Looking Statements This presentation 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” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about Corteva’s strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures, and financial results, as well as expected benefits from, the separation of Corteva from DuPont, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements 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) effect of competition and consolidation in Corteva's industry; (iii) failure to obtain or maintain the necessary regulatory approvals for some Corteva's products; (iv) failure to enforce Corteva's intellectual property rights or defend against intellectual property claims asserted by others; (v) effect of competition from manufacturers of generic products; (vi) impact of Corteva's dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (vii) costs of complying with evolving regulatory requirements and the effect of actual or alleged violations of environmental laws or permit requirements; (viii) effect of the degree of public understanding and acceptance or perceived public acceptance of Corteva's biotechnology and other agricultural products; (ix) effect of changes in agricultural and related policies of governments and international organizations; (x) effect of industrial espionage and other disruptions to Corteva's supply chain, information technology or network systems; (xi) competitor's establishment of an intermediary platform for distribution of Corteva's products; (xii) effect of volatility in Corteva's input costs; (xiii) failure to raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xiv) failure of Corteva's customers to pay their debts to Corteva, including customer financing programs; (xv) failure to realize the anticipated benefits of the internal reorganizations taken by DowDuPont in connection with the spin-off of Corteva, including failure to benefit from significant cost synergies; (xvi) risks related to the indemnification obligations of legacy EID liabilities in connection with the separation of Corteva; (xvii) increases in pension and other post-employment benefit plan funding obligations; (xviii) effect of compliance with environmental laws and requirements and adverse judgments on litigation; (xix) risks related to Corteva's global operations; (xx) effect of climate change and unpredictable seasonal and weather factors; (xxi) effect of counterfeit products; (xxii) failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions; (xxiii) risks related to non-cash charges from impairment of goodwill or intangibles assets; (xxiv) risks related to COVID-19; (xxv) risks related to oil and commodity markets, and (xxvi) other risks related to Corteva’s 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 or other estimate, 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 or other estimates is included in the “Risk Factors” section of Corteva’s Annual Report on Form 10-K, as modified by subsequent reports on Forms 10-Q and Current Reports on Form 8-K. 2
A Reminder About Non-GAAP Financial Measures and Pro Forma Financial Information Corteva Unaudited Pro Forma Financial Information In order to provide the most meaningful comparison of results of operations, supplemental unaudited pro forma financial information for the first quarter of 2019 has been included in this presentation. This presentation presents the pro forma results of Corteva, after giving effect to events that are (1) directly attributable to the merger of DuPont and Dow, debt retirement transactions related to paying off or retiring portions of Historical DuPont’s existing debt liabilities, and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva common stock; (2) factually supportable and (3) with respect to the pro forma statements of income, expected to have a continuing impact on the consolidated results. Refer to Corteva’s Form 10 registration statement filed on May 6, 2019, which can be found on the investors section of the Corteva website, for further details on the above transactions. The pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X, and are presented for informational purposes only, and do not purport to represent what the results of operations would have been had the above actually occurred on the dates indicated, nor do they purport to project the results of operations for any future period or as of any future date. Regulation G (Non-GAAP Financial Measures) This is earnings release includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures may include organic sales, organic growth (including by segment and region), operating EBITDA, pro forma operating EBITDA, operating EBITDA margin, pro forma operating EBITDA margin, operating earnings per share, pro forma operating earnings per share, base tax rate and pro forma base tax rate. Management believes that these non-GAAP measures 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-6 of the Financial Statement Schedules. For first quarter 2019, these non-GAAP measures are being reconciled to a pro forma GAAP financial measure prepared and presented in accordance with Article 11 of Regulation S-X. Reconciliations for these non-GAAP measures to their most directly attributable U.S. GAAP measure are provided on slides 19 - 24 of this presentation. Corteva is not able to reconcile its forward-looking non-GAAP financial measures to their 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-8 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 noncash 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® Roundup Ready 2 Xtend® herbicide tolerance traits. During the five-year ramp-up period of Enlist E3TM, Corteva is expected 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 after the completion of the ramp-up. Organic sales is defined as price and volume and excludes currency and portfolio impacts. Operating EBITDA is defined as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits, net and foreign exchange gains (losses), excluding the impact of significant items (including goodwill impairment charges). Non-operating benefits, net consists of non-operating pension and other post-employment benefit (OPEB) credits, tax indemnification adjustments, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense. Operating EBITDA margin is defined as Operating EBITDA as a percentage of net sales. Operating earnings per share are defined as "Earnings per common share from continuing operations - diluted" excluding the after-tax impact of significant items (including goodwill impairment charges), the after-tax impact of non-operating benefits, net, and the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont. 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. Base tax rate is defined as the effective tax rate excluding the impacts of foreign exchange gains (losses), non-operating benefits, net, amortization of intangibles as of the Separation from DowDuPont, and significant items (including goodwill impairment charges). The first quarter of 2019 is on a pro forma basis as discussed above in the paragraph ‘Corteva Unaudited Pro Forma Financial Information’. 3
Our COVID-19 Response Employee Safety & Security Customer Support & Supply Resilience Government & Community Outreach Mobilized global crisis management teams Leveraging multi-source supply chain strategy to Partnering with Global Giving for international grant ensure reliable product supply Cancelled in-person internal and external funding meetings Secured essential industry classification to ensure Donating over $1 million to food security agencies Instituted travel bans in early March business continuity and providing support to disaster relief organizations Migrated more than 50 percent of employees to Suspended large customer and promotional events work from home Expanding the use of digital marketing tools to Collaborating with MercyOne Hospitals to conduct COVID-19 testing at our Johnston, IA research labs Reduced manufacturing sites to essential facilitate customer training and product knowledge personnel transfer Donating personal protective equipment and hand sanitizer to hospitals and health care professionals Deployed personal protective equipment for field Providing agronomic services remotely – currently conducting drone flights to help U.S. growers do teams and essential site employees Providing educational materials for children through seed counts and scouting through a service called Corteva Grows Working aggressively to avoid layoffs, broad Corteva Flight – over 1,000 pilots doing flights furloughs, or pay reductions due to this crisis Working with agriculture organizations to secure Secured first electronic Crop Protection government financial aid for farmer customers Offering benefit enhancements (e.g., no cost registrations COVID-19 testing, access to Telehealth) Providing input to government officials on restart planning and safety measures Focused on employee safety, business continuity, and emerging strong 4
1Q 2020 Performance Highlights Net Sales Operating EBITDA(1), (2) Highlights $ in millions Reported net sales up 16% with double $4.0B Op. (2) $794 digit organic growth in both reporting Reported EBITDA(2) $3.4B segments and across all regions 16% $518 Growth 53% Earnings improved on strong early Organic(2) demand for seed in North America(4) and Europe and improved pricing for new 20% (3) Seed and Crop Protection products 1Q'19 1Q'20 1Q'19 1Q'20 Delivered spending efficiencies in SG&A (2) Sales Growth by Segment Op. EBITDA Margin Improvement and R&D in the quarter Seed Crop Protection Op. > 450 basis point EBITDA improvement due to Reported 25% Reported 5% 20.1% (4) Margin(2) strong North America Currency impact, primarily in Brazil and (2) (2) Organic 27% Organic 10% and Europe demand Europe, reduced earnings by $50 million Double digit net sales and Operating EBITDA(2) growth (1) Income from Continuing Ops was $112 million and $281 million for the quarter ended March 31, 2019 and 2020, respectively, a year-over-year growth of 151% (2) Organic sales, Operating EBITDA and Operating EBITDA Margin are non-GAAP measures. See slide 3 for further discussion. (3) First quarter 2019 is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. (4) North America is defined as U.S. and Canada. 5
Progress on Five Priorities for Shareholder Value Creation 1Q 2020 Highlights 01 02 03 04 05 Instill a strong Drive disciplined Develop innovative Attain best-in-class Deliver above- culture capital allocation solutions cost structure market growth Organization highly Strong balance sheet Strong volume and Realized merger cost Organic sales(2) up engaged in and liquidity position price gains for Qrome® synergies of double digits in implementing Declared quarterly and PowerCore Ultra approximately $70 every region corn products spending reduction dividend of $0.13/share million for the quarter Pioneer brand corn actions Executed $50 million in Received first approvals On track to deliver seed deliveries up Cross-functional team share repurchases(1) for Inatreq™ fungicide $200 million in merger approximately 60 launched to drive under the authorized in Europe cost synergies for full percent for the cash preservation program Delivered greater than year quarter versus last year Announced new Examining proactive $20 million in earnings Reduced R&D costs by Chief Technology cash contribution to the improvement from new 6 percent Delivered greater Crop Protection Officer primary U.S. pension SG&A as percent of than 4 percent year- products in the quarter, Announced new plan net sales down over-year price remain on track to Chief Sustainability approximately 260 improvement in corn deliver $100 million for Officer basis points(3) seed products full year (1) Date of last share repurchase in first quarter 2020 was March 10, 2020. (2) Organic sales is a non-GAAP measures. See slide 3 for further discussion. (3) First quarter 2019 is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. 6
1Q 2020 Regional Net Sales Highlights North America Europe, Middle Latin America Asia Pacific East, Africa Net Sales $1.77B $1.47B Reported $1.36B Reported Reported Reported $1.39B 27% 8% $0.43B 19% 5% $0.37B $0.28B $0.29B Organic(1) Organic (1) Organic (1) Organic (1) 28% 11% 30% 10% 1Q'19 1Q'20 1Q'19 1Q'20 1Q'19 1Q'20 1Q'19 1Q'20 Volume Price Currency Portfolio Volume Price Currency Portfolio Volume Price Currency Portfolio Volume Price Currency Portfolio 26% 2% - % (1)% 9% 2% (3)% - % 19% 11% (11)% - % 8% 2% (3)% (2)% Regional Highlights Acreage rebound Early demand Currency devaluation Operational resilience USDA Prospective Plantings report Strong spring campaign and early Strong demand for new products, Early impacts from pandemic ® indicates strong corn and soybean demand from customers to secure including PowerCore Ultra corn largely mitigated acreage rebound product due to COVID-19 seed, IsoclastTM insecticide drove both volume and price Continued demand for spinosyns Favorable weather and strong demand concerns insecticides in Crop Protection drove early corn seed deliveries Strong demand for new products Pricing improvement from seed TM such as Arylex herbicide technology mix offset by Strong start in South Asia for corn Price improvement highlights impact unfavorable currency impact from from new products, including Continued benefit from route to Brazilian Real Qrome® corn seed and Lumialza™ market improvements across Europe seed treatment (1) Organic sales growth is a non-GAAP measure. See slide 3 for further discussion. 7
Delivering Above-Market Growth Against an Uncertain Backdrop Seed Delivery Pace(1) First Half Momentum Second Half Uncertainties Impact of softening global commodity U.S. Pioneer Brand Corn Deliveries North America planted acreage up year- prices on row crop acreage level and 2018 over-year consistent with expectations 2019 allocation in 2020 season 2020 Continued currency devaluation, Strong product performance and new particularly the Brazilian Real technology offerings Deliveries on Timing and amount of government final 3 days of Weather conditions conducive to strong stimulus and impact on grower liquidity 1Q’20 generated ~$100 million in start to North America planting earnings Seasonal weather conditions Q1 Q2 17-Mar 24-Mar 31-Mar 7-Apr 14-Apr 21-Apr 28-Apr Responsive, direct route-to-market in key Shifts in corn and soybean consumption countries allows quick pivots (e.g., China, feed demand, and ethanol) ahead of 2021 season Focused on demand creation and preparing for second half uncertainties (1) Represents year-to-date seed deliveries recognized in the Pioneer corn brand in the United States. 8
1Q 2020 Segment Performance Highlights Crop Protection Seed ($ in millions) 1Q 2020 vPY ($ in millions) 1Q 2020 vPY Net Sales – Reported $1,501 +5% Net Sales - Reported $2,455 +25% Net Sales – Organic(1) +10% Net Sales - Organic(1) +27% Operating EBITDA $238 +8% Operating EBITDA $581 +79% Operating EBITDA Margin 15.9% +50bps Operating EBITDA Margin 23.7% +715bps Crop Protection Operating EBITDA Bridge ($ in millions) Seed Operating EBITDA Bridge ($ in millions) 238 581 220 325 (2) Portfolio Non- Other Non- 1Q’19 Currency Volume Price Production 1Q’20 1Q’19(2) Portfolio Currency Volume Price Production Other 1Q’20 Costs(3) Production Costs(3) Production Costs(4) Costs(4) (1) Organic sales is a non-GAAP measure. Refer to slide 3 for further details. (2) First quarter 2019 is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. (3) Production costs are net of synergies realized in the period. (4) Non-Production Costs includes costs such as selling, leveraged function costs and product development, net of synergies realized in the period. 9
Keeping Our Supply Chains Open Through Crisis Ingredient & Raw Material Sourcing Logistics Plant Operations Disruptions occurred in many supply Increasing logistical complexities due to Manufacturing plants are continuing priority chains, especially China and India state and national restrictions operations, even in most severely impacted Supply chain design sufficient to buffer Rapid response to deploy effective WHO regions major impacts: ~80%(1) multi-sourced with and CDC protocols to ensure safety Many Crop Protection formulation and (1) ~65% coming from the U.S. Managing border crossing challenges and packaging plants are in close proximity to the Strong restart of China industrial some capacity challenges, particularly air customer manufacturing positive to on-going freight, to mitigate impacts Seed production facilities are regionally resiliency located enabling a high-level of customer Expect minimal impact from reduced crude service oil prices Supply chain resilient in the face of COVID-19 disruptions (1) Represents percentage of total Crop Protection sales. 10
Liquidity Underpinned by Strong Balance Sheet Prudent Management of Robust Liquidity Position at 1 3 4 Cash Preservation Actions Capital Structure March 31, 2020 (1) Maintain A- credit profile to $0.3B Accelerating working support differentiated Uncommitted capital productivity actions Credit Lines ~$2B business model Cash Driving targeted spending actions 2 Diverse set of tools for intra-year working capital financing ~$8 (2),(3) Billion Optimizing capital $5B Commercial Paper Program expenditures toward the lower end of previous $1.3B Repurchase Facility $6B Credit range Facilities(3) Bolstering balance sheet through cash preservation actions (1) Rating expressed using S&P nomenclature. (2) Does not include $1.3B repurchase facility or $5B commercial paper program. (3) Does not reflect the $500 million draw down in 1Q’20. 11
Suspending Full Year 2020 Guidance Due to COVID-19 Uncertainty 1H 2020 Growth Managing Costs 2H Uncertainties Organic Sales(1) Growth +6% Productivity/Synergies Currency Exposure . U.S. planted area: +13 million acres . Committed to delivering $230 million . ~30% of 2H net sales are (~40% corn) in full-year synergy and productivity concentrated in Brazil, which are . Global corn pricing: +2% commitments – about 50% realized in heavily weighted to December . U.S. soybean pricing: down low 1H’20 single-digit 2021 Corn Acreage Uncertainty . Crop Protection new product sales Costs of Goods . 4Q deliveries +$120 million, ex-currency(1) . $150 million full-year headwind on seed unit costs and higher royalties Currency . Expect ~$150 million Operating EBITDA(1) impact in 1H’20, before Targeted Spending Actions pricing actions . Expect annualized savings of approximately $100 million as a result of spending actions partially offsetting higher commissions on volume improvement and ERP costs Focusing on first half execution and preparing for second half uncertainties (1) Organic sales and Operating EBITDA are non-GAAP measures. See slide 3 for further discussion. 12
1Q 2020 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) (2) America 1% 1% America 17% 30% Global Net Sales Q1 2019 Q1 2020 Q1 2019 Q1 2020 $1.5B Net Sales ($MM) $479 $475 Net Sales ($MM) $187 $218 Volume Price Currency Portfolio Volume Price Currency Portfolio $1.4B 5% (4)% - % (2)% 24% 6% (13)% - % Reported Volume growth due to strong demand for Strong demand for new products, including 5% EnlistTM herbicide IsoclastTM insecticide, including $20 million of sales that typically occur in 2Q Organic(1) Pricing reflects timing of grower incentive Pricing improvement offset by currency 10% discount recognition impact from Brazilian Real Reported Organic(1) Asia Reported Organic(1) (3) Q1'19 Q1'20 EMEA 5% 9% Pacific 9% 14% Volume Price Currency Portfolio Q1 2019 Q1 2020 Q1 2019 Q1 2020 10% - % (4)% (1)% Net Sales ($MM) $560 $586 Net Sales ($MM) $203 $222 Volume Price Currency Portfolio Volume Price Currency Portfolio 9% - % (4)% - % 13% 1% (2)% (3)% Continued penetration of new products, Volume growth due to continued strong including ArylexTM herbicide and early demand for insecticides, including spring and strong demand due to spinosyns perceived supply concerns drove volumes (1) Organic sales growth is a non-GAAP measure. See slide 3 for further discussion. Ramp-up of new technology, including (2) North America is defined as U.S. and Canada. Unfavorable currency impact from Euro (3) EMEA Is defined as Europe, Middle East and Africa. PyraxaltTM insecticide and RinskorTM herbicide 14
1Q 2020 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) (2) America 41% 41% America 21% 30% Global Net Sales Q1 2019 Q1 2020 Q1 2019 Q1 2020 Net Sales ($MM) $913 $1,290 Net Sales ($MM) $178 $216 $2.5B Volume Price Currency Portfolio Volume Price Currency Portfolio $2.0B 37% 4% - % - % 14% 16% (9)% - % Reported Higher seed volume on early deliveries due Continued penetration of PowerCore Ultra® in 25% to improved conditions and anticipated corn led to improved pricing and volume recovery of planted area improvement from share gains in Brazil Safrinha Organic(1) New products, including Qrome®, and Unfavorable currency impact from Brazilian 27% proprietary seed treatment driving price Real Reported Organic(1) Asia Reported Organic(1) Q1'19 Q1'20 EMEA(3) 10% 13% Pacific 6% 2% Volume Price Currency Portfolio Q1 2019 Q1 2020 Q1 2019 Q1 2020 22% 5% (2)% - % Net Sales ($MM) $804 $881 Net Sales ($MM) $72 $68 Volume Price Currency Portfolio Volume Price Currency Portfolio 10% 3% (3)% - % (7)% 5% (4)% - % Volume growth on increased shipments due to favorable conditions and perceived Volume declines due to dry weather and supply concerns from COVID-19 COVID-19 disruptions Improved pricing from route-to-market (1) Organic sales growth is a non-GAAP measure. See slide 3 for further discussion. Pricing gains due to strong demand for corn in (2) North America is defined as U.S. and Canada. changes in Eastern Europe offset by (3) EMEA Is defined as Europe, Middle East and Africa. South Asia currency due to the Euro 15
1Q 2020 Highlights ($’s in millions, except EPS) 1Q 2019(1) 1Q 2020 Change Net Sales $3,396 $3,956 16% GAAP Income from Continuing Operations After Income Taxes $112 $281 151% Operating EBITDA(2) $518 $794 53% Operating EBITDA Margin(2) 15.3% 20.1% ~480 bps GAAP EPS from Continuing Operations $0.14 $0.36 157% Operating EPS(2) $0.33 $0.59 79% 1Q 2020 Net Sales Bridge ($ in millions) 1Q 2020 Operating EBITDA (2) Bridge ($ in millions) 3,956 794 518 3,396 North Latin (2) Asia (1) Price Production Non- Other 1Q 2019 (2) (2) EMEA (2) Portfolio Currency 1Q 2020 1Q 2019 Portfolio Currency Volume 1Q 2020 America America Pacific Costs(3) Production Costs(4) Earnings and Margin Improvement Over Prior Year (1) First quarter 2019 is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. (2) Organic sales, Operating EBITDA, Operating EBITDA margin and Operating earnings per share are non-GAAP measures. See slide 3 for further discussion. (3) Production costs are net of synergies realized in the period. (4) Non-Production Costs includes costs such as selling, leveraged function costs and product development, net of synergies realized in the period. 16
1Q 2020 Operating EPS(1) Variance Operating EPS(1) Bridge ($) $0.05 ($0.01 ) ($0.06 ) $0.31 $0.02 $0.59 $0.33 ($0.05 ) 1 2 3 4 5 6 Q1'19(2) Currency Volume/Price Costs Change in Base Tax EGL(3) Other/Portfolio Q1'20 Rate (1) Currency 1 Volume/Price 2 Costs 3 . Currency headwinds predominately from Brazilian Real . Growth led by North America where favorable weather . Continued realization of merger-related synergies and Euro conditions and higher anticipated planted area led to . On-going productivity actions increased seed deliveries Change in Base Tax Rate(1) 4 EGL(3) 5 Other 6 . Q1’20 Base Income Tax Rate: 21.6% . Exchange losses due to currency devaluation for the . Lower depreciation expense partially offset by . Q1’19 Base Income Tax Rate: 20.7% Ukrainian Hryvnia, Argentine Peso and Mexican Peso divestitures completed in 2019 Growth in every region and cost productivity drove earnings per share improvement (1) Operating earnings per share and base tax rate are non-GAAP measures. See slide 3 for further discussion. GAAP EPS for the first quarter 2019 and 2020 was $0.14 and $0.36, respectively. (2) First quarter 2019 is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. (3) EGL is defined as Exchange Gain / (Loss) 17
2020 Key Assumptions Update Factor January 30 Guidance Q1 2020 Trend 1H 2020 Indication . Assumed 4.25 BRL/USD . Operating EBITDA(1) impacted negatively . Expect currency headwinds of ~$150 million in Currency . Will use financial hedging and pricing by currency devaluation earnings, led by BRL, CAD and MXN actions to mitigate currency movements . $50 million headwind in the quarter . Partially offset by pricing . Partially offset by pricing . 11+ million acre recovery driving volume . +13 million acre recovery with ~40% going to . +13 million acre recovery with ~40% going to (Segment split - 65% Seed/ 35% Crop corn corn North America Market Protection) . . Rebound Strong seed invoicing and early deliveries on Too early to evaluate replant tailwind as . Replant tailwind on pricing (1 % in corn, 2 favorable conditions majority is soybeans and will be recognized in % in soybeans) 3Q 2020 . Global Corn Seed Price . Up low single digits . Up 4 percent globally year-over-year Up low-single digit percent globally year- over-year . Early invoicing suggests competitive price . Down low single-digit percent in the U.S. U.S. Soybean Seed Price . Down mid-single digit percent environment . Internal discipline . . Expect ~$120 million in net sales increase New Crop Protection . Net sales increase year-over-year of $250 Delivered ~$70 million in net sales increase in the quarter, ex-currency(1) in the first half, ex-currency(1) Products million . . $50 million in incremental royalties . Delivered approx. $70 million in Expect ~$115 million in merger-related synergies/productivity cost synergies and productivity Cost of Goods Sold . Seed COGS increased by $100 million . Seed COGS increased in the quarter due to . COGS headwinds on unfavorable yields . Merger cost synergies and productivity impact of unfavorable yields and higher royalty costs tracking as expected . Expect ~$50 million increase in SG&A on higher . ERP costs expected to be $50 million . SG&A costs up on higher commissions, SG&A and R&D commissions . R&D costs expected to increase $50 while R&D costs decreased . Spending actions partially offset higher million . SG&A as % of net sales down 260 bps (1) Organic sales growth and Operating EBITDA are non-GAAP measures. See slide 3 for further discussion. commissions 18
Corteva Non-GAAP Calculation of Corteva Operating EBITDA Three Months Ended March 31, 2020 2019 In millions As Reported Pro Forma Income from continuing operations, net of tax (GAAP) 1 $ 281 $ 112 Provision for (benefit from) income taxes 127 (20) Income from continuing operations before income taxes $ 408 $ 92 + Depreciation and Amortization 283 258 - Interest income (18) (16) + Interest expense 10 14 + / - Exchange losses, net 61 27 + / - Non-operating benefits, net (73) (42) + Significant items charge 123 185 2 Corteva Operating EBITDA (Non-GAAP) $ 794 $ 518 1. Pro forma income from continuing operations, net of tax, has been prepared in accordance with Article 11 of Regulation S-X and is considered the most directly comparable GAAP measure to Pro Forma Operating EBITDA. 2. Corteva Operating EBITDA is defined as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits (costs) - net and foreign exchange gains (losses), excluding the impact of significant items. Non-operating benefits (costs) - net consists of non-operating pension and other post-employment benefit (OPEB) credits (costs), tax indemnification adjustments, environmental remediation and legal costs associated with Historical DuPont 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. 19
Corteva Segment Information Net sales by segment In millions Three Months Ended March 31, 2020 2019 Seed $ 2,455 $ 1,967 Crop Protection 1,501 1,429 Total net sales $ 3,956 $ 3,396 Corteva Operating EBITDA Three Months Ended March 31, 2020 2019 In millions As Reported Pro Forma Seed $ 581 $ 325 Crop Protection 238 220 Corporate (25) (27) 1 Corteva Operating EBITDA (Non-GAAP) $ 794 $ 518 1. Corteva Operating EBITDA is defined as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits (costs) - net and foreign exchange gains (losses), excluding the impact of significant items. Non-operating benefits (costs) - net consists of non-operating pension and other post-employment benefit (OPEB) credits (costs), tax indemnification adjustments, environmental remediation and legal costs associated with Historical DuPont 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 EBITDA margin Three Months Ended March 31, 2020 2019 As Reported Pro Forma Seed 23.7% 16.5% Crop Protection 15.9% 15.4% 2,3 Total Operating EBITDA margin (Non-GAAP) 20.1% 15.3% 2. Operating EBITDA margin is Operating EBITDA as a percentage of net sales. 3. Operating EBITDA margin %'s for Corporate are not presented separately above as they are not meaningful; however, the results are included in the Total margin %'s above. 20
Corteva significant items (Pretax) Three Months Ended March 31, 2020 2019 In millions As Reported Pro Forma Seed Loss on divestiture - (24) Restructuring and asset-related charges - net (10) (27) Total Seed (10) (51) Crop Protection Loss on divestiture (53) - Restructuring and asset-related charges - net (18) (23) Total Crop Protection (71) (23) Corporate Integration costs - (100) Restructuring and asset-related charges - net (42) (11) Total Corporate (42) (111) Total significant items by segment (Pretax) (123) (185) Total tax impact of significant items 23 92 Tax only significant items (19) - 1 Total significant items charge, net of tax $ (119) $ (93) 1. Refer to page A-8 of the Financial Statement Schedules for further information on significant items, including tax only items. 21
Corteva Segment Information - Price, Volume Currency Analysis Region Q1 2020 vs. Q1 2019 Percent Change Due To: Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & Portfolio / $ (millions) % $ (millions) % Product Mix Volume Currency Other North America1 $ 373 27% $ 380 28% 2% 26% 0% -1% EM EA1 103 8% 154 11% 2% 9% -3% 0% Latin America 69 19% 110 30% 11% 19% -11% 0% Asia Pacific 15 5% 28 10% 2% 8% -3% -2% Rest of World 187 9% 292 15% 4% 11% -5% -1% Total $ 560 16% $ 672 20% 3% 17% -3% -1% Seed Q1 2020 vs. Q1 2019 Percent Change Due To: Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & Portfolio / $ (millions) % $ (millions) % Product Mix Volume Currency Other 1 North America $ 377 41% $ 375 41% 4% 37% 0% 0% 1 EM EA 77 10% 105 13% 3% 10% -3% 0% Latin America 38 21% 54 30% 16% 14% -9% 0% Asia Pacific (4) -6% (1) -2% 5% -7% -4% 0% Rest of World 111 11% 158 15% 6% 9% -4% 0% Total $ 488 25% $ 533 27% 5% 22% -2% 0% Crop Protection Q1 2020 vs. Q1 2019 Percent Change Due To: Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & Portfolio / $ (millions) % $ (millions) % Product Mix Volume Currency Other 1 North America $ (4) -1% $ 5 1% -4% 5% 0% -2% 1 EM EA 26 5% 49 9% 0% 9% -4% 0% Latin America 31 17% 56 30% 6% 24% -13% 0% Asia Pacific 19 9% 30 14% 1% 13% -2% -3% Rest of World 76 8% 135 14% 1% 13% -5% -1% Total $ 72 5% $ 140 10% 0% 10% -4% -1% 1. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa. 22
Corteva Non-GAAP Calculation of Corteva Operating EPS Three Months Ended March 31, 2020 2019 2020 2019 $ (millions) $ (millions) EPS (diluted) EPS (diluted) As Reported Pro Forma As Reported Pro Forma Net income from continuing operations attributable to Corteva (GAAP) $ 271 $ 104 $ 0.36 $ 0.14 2 Less: Non-operating benefits - net, after tax 57 31 0.08 0.04 Less: Amortization of intangibles (existing as of Separation), after tax (114) (81) (0.15) (0.11) Less: Significant items charge, after tax (119) (93) (0.16) (0.12) 1 Operating Earnings (Non-GAAP) $ 447 $ 247 $ 0.59 $ 0.33 1. Operating earnings is defined as net income from continuing operations attributable to Corteva excluding the after-tax impact of significant items, non-operating benefits - net, and amortization of intangible assets (existing as of Separation). Although amortization of intangible assets (existing as of Separation) 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. 2. Non-operating benefits - net consists of non-operating pension and other post-employment benefit (OPEB) (benefits) costs, tax indeminfication adjustments, environmental remediation and legal costs associated with legacy EID 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. 23
Corteva Non-GAAP Calculation of Corteva Base Tax Rate Three Months Ended March 31, 2020 2019 As Reported Pro Forma Income from continuing operations before income taxes (GAAP) $ 408 $ 92 Add: Significant items - charge 123 185 Non-operating benefits - net (73) (42) Amortization of intangibles (existing as of Separation) 163 101 2 Less: Exchange losses, net (61) (27) Income from continuing operations before income taxes, significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), and exchange losses, net (Non-GAAP) $ 682 $ 363 Provision for (benefit from) income taxes on continuing operations (GAAP) $ 127 $ (20) Add: Tax benefits on significant items charge 4 92 Tax expenses on non-operating benefits - net (16) (11) Tax benefits on amortization of intangibles (existing as of Separation) 49 20 ov Tax s o expenses o co on e exchangeta es o gainsco t (losses), u g ope net at o s be o e (17) (6) significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), and exchange losses, net (Non-GAAP) $ 147 $ 75 Effective income tax rate (GAAP) 31.1% -21.7% Significant items, non-operating benefits, and amortization of intangibles (existing as of Separation) effect -4.7% 45.8% Tax rate from continuing operations before significant items, non-operating benefits - net, and amortization of intangibles (existing as of Separation) 26.4% 24.1% Exchange losses, net effect -4.8% -3.4% Base income tax rate from continuing operations (Non-GAAP)1 21.6% 20.7% 1. Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), significant items, amortization of intangibles (existing as of Separation), and non-operating benefits - net. 2. Refer to page A-12 of the Financial Statement Schedules for further information on exchange gains (losses). 24