Corteva, Inc. (CTVA) Earnings

Management highlights

### Core Business Performance and Strategic Progress - First half 2026 delivered strong results: net sales +4%, operating EBITDA +10%, operating EPS +14% year-over-year, with 200 basis points of margin expansion driven by technology adoption, operational discipline, and productivity gains. - Farmers globally continue to prioritize productivity and return on investment, which aligns with Corteva's differentiated technology portfolio focused on higher yield and more efficient resource use. Global demand for food, feed, and biofuels remains strong, while farmer margins stay tight, leading to continued focus on value-driven investments. - In Seed, the new licensing business is growing three years ahead of original internal plans. Conquesta E3 product momentum remains on track, with expected high single-digit to low double-digit market penetration in Brazil by 2027. - In Crop Protection, the multi-year strategy of building a differentiated innovation-focused portfolio and reducing production costs is delivering results. The pipeline, particularly for nature-based products, has been strengthened via a recent acquisition, and the new product portfolio now has a strong margin profile with flat pricing and high single-digit volume growth. ### Planned Separation Update - The separation into two independent public companies (New Corteva and Vylor, the new advanced seed and genetics company) remains on track for completion on October 1, 2026, and is under budget. - Key separation milestones achieved include naming the new companies, appointing leadership and boards of directors, publicly filing Form 10, and engaging credit rating agencies for planned capital structures. - On a run-rate basis, separation-related disynergies have been largely offset by internal efficiency actions, with only a $25 million headwind expected for full-year 2026, a better result than originally planned. - A joint Investor Day for both companies will be held September 15, 2026 in New York, where full long-term strategies, financial frameworks, and capital allocation plans will be presented.

Guidance

- Management raised full-year 2026 guidance driven by stronger-than-expected first half performance and confidence in second half execution. The updated outlook is for operating EBITDA of $4.1 billion to $4.3 billion, representing approximately 9% year-over-year growth at the midpoint. - Operating EBITDA margin guidance was raised to 22.5% to 23.5%, reflecting continued sales growth and disciplined cost management. - Operating EPS guidance was raised to $3.60 to $3.80 per share, representing 11% year-over-year growth at the midpoint, partially offset by higher net interest expense. - For the second half of 2026, management expects total EBITDA to be roughly flat year-over-year, with a seasonal Q3 operating EBITDA loss in line with 2024 levels, and all second half earnings delivered in Q4. The second half follows a typical seasonal pattern, representing ~12% of full-year EBITDA, consistent with historical ranges. - For Seed in the second half, management expects low single-digit organic sales growth, with Brazil corn planted area expected to remain roughly flat. - For Crop Protection in the second half, management expects high single-digit volume growth led by new product adoption, with pricing expected to decline low to mid single digits. The updated pricing outlook reflects deeper competitive pressure in Brazil and a small number of other regional pockets. - The long-term 2027 target of $4.4 billion in operating EBITDA (originally communicated in 2024) remains intact, with the company currently tracking slightly ahead of the original plan, particularly on cost productivity and royalty income.

Segment performance

Corteva operates two core product segments: Seed and Crop Protection. For the first half of 2026, combined net sales across the company increased 4% year-over-year to $11.3 billion, with organic sales growing 2%, and total operating EBITDA increased 10% to $3.7 billion. For the Seed segment, organic sales grew low single digits year-over-year in the first half, with organic growth across all regions led by North America and EMEA. Increased royalty income from the fast-growing new licensing business and demand for differentiated genetics drove performance, and the segment contributed to overall margin expansion. For the Crop Protection segment, first half net pricing declined low single digits year-over-year (in line with management expectations) driven by competitive pressure, particularly in Latin America. Volumes grew low single digits year-over-year, with high single-digit volume growth for new products, which are expected to reach $2 billion in full-year 2026 revenue. Productivity improvements, lower input costs, and favorable currency offset most pricing pressure, and the segment also contributed to overall first half margin expansion. In Q2 2026 alone, net sales were $6.4 billion and operating EBITDA increased 4% to $2.3 billion, bringing first half operating EBITDA margin to 32.8%, a 200 basis point expansion year-over-year.

Risks & headwinds

- Persistent competitive pricing pressure in pockets of the global crop protection market, particularly in Latin America (Brazil) for off-patent pre-emergent herbicides, driven by a well-supplied market and generic competition. - Tight farmer credit conditions in Brazil are leading to slower order decision-making closer to planting, creating near-term volume uncertainty for the upcoming safrania season. - Geopolitical uncertainty and ongoing foreign exchange volatility create potential headwinds to second half results, with tariffs, disynergies, and Middle East conflict impacts concentrated in the back half of 2026. - El Nino-related dry weather in Europe and parts of the U.S. is reducing expected demand for fungicides in the second half of 2026. - While separation costs have been better than expected, there is still residual execution risk for remaining IT separation and capital structure finalization ahead of the October 1 target date.

Analyst Q&A

• Q: What is driving the expectation of flat Brazil corn acres in the second half, and what is the penetration outlook for Conquesta? /

  A: Flat planted area reflects a pause after several years of low single-digit safrania expansion, rather than weak demand. Corteva's order book for Brazil is currently ahead of market pace, putting the company in a strong competitive position entering the fourth quarter ordering window. Conquesta E3 penetration is on track to reach high single-digit to low double-digit market share by 2027, with momentum remaining solid. (278)

• Q: What are the biggest strengths of New Corteva that you will highlight as incoming CEO, and what are the core long-term priorities? /

  A: The biggest core strength is the experienced, farm-aligned team that understands customer needs. Two-thirds of the current crop protection portfolio is differentiated technology, with broad diversification across actives, crops, and geographies, creating a strong competitive advantage. The pipeline is the strongest in the industry, with seven new active ingredients launching over the next decade, and the existing portfolio blends biological and synthetic solutions to meet grower needs. Full details will be shared at the September Investor Day. (412)

• Q: With 2026 guidance midpoint of $4.2 billion EBITDA, does the long-term 2027 target of $4.4 billion still imply mid-single-digit year-over-year growth, and is the original plan still on track? /

  A: The original 2024 long-term plan for 2027 $4.4 billion EBITDA remains fully intact, and the company is currently slightly ahead of the original plan in 2026. Growth is coming from core high-margin growth platforms: seed licensing is three years ahead of plan, and new crop protection products will hit $2 billion in 2026 revenue with strong margins. Cost and productivity discipline remains a core company priority, and separation disynergies have been largely offset already. Full long-term details will be shared at the September Investor Day. (454)

• Q: With low single-digit overall crop protection pricing declines, how does pricing perform for the differentiated portion of the portfolio, and why is overall pricing declining? /

  A: Overall pricing decline of ~3% in the first half was in line with expectations, with pricing essentially flat in Europe and the U.S. New differentiated products (approaching $2 billion 2026 revenue) have flat pricing and high single-digit volume growth, exactly as expected. The overall pricing decline is driven by competitive pressure in Brazil and a small number of other pockets, concentrated in off-patent pre-emergent herbicides, as well as lower fungicide demand from dry El Nino weather. Despite the pricing pressure, cost structure optimization allows the business to still grow EBITDA. (437)

• Q: What is the current state of Brazil order books compared to last year and historical trends? /

  A: Corteva's orders are currently ahead of the overall market pace, putting the company in a strong competitive position. However, tight credit, higher fuel and fertilizer prices, and compressed farmer margins are leading growers to delay planting decisions closer to the planting window, unlike last year when orders were well ahead of pace at this time. Corteva's product portfolio for both summer and safrania crops is the strongest it has ever been, and management remains confident in its share position. (321)