Corteva, Inc. Q1 FY2025 earnings call

• Growth Platforms: EBITDA growth was driven by strong cost execution in Biologicals, CP new products, and seed out-licensing. On track to meet the $400 million net cost target.
• Regional Progress: US farmers shifting planted area to corn (5% increase projected). Enlist beans at over 65% of US soybean acres. Progress in Brazil corn and soybean technology, with Conkesta E3 soybeans sold over 3 million units in three years.
• Tariffs: Direct cost impact to Corteva in 2025 is ~$50 million, manageable, not factored into guidance.
• Financials: Q1 EBITDA up 15%, margin expansion 390 basis points. Seed net royalty expense decreased by $20 million. Seed and crop protection combined to deliver over $200 million in productivity and cost benefits.

Seed: Organic sales were up 2% in the quarter. Seed volume was down 1% compared to prior year. Seed delivered just under 400 basis points of margin enhancement for the quarter. Crop Protection: Organic sales were up 3% in the quarter, with volume up 5% driven by double digit gains in new products and Biologicals. The full-year crop protection market is flattish with low single digit volume gains offset by low single digit pricing headwinds, but Corteva expects high single digit volume gains to offset low single digit pricing headwinds.

• Reaffirmed full-year guidance announced in February. First half expected to be better than original plan, with net sales flat vs prior year and operating EBITDA up low to mid single digits. Second half expected to have strong sales and operating EBITDA growth driven by low single digit price and double digit volume growth. Tariff impact not included in guidance. FX exposure and corn acres are key drivers of guidance.

• Tariffs with an ~$50 million direct cost impact, though manageable. Mitigation efforts ongoing but not factored into guidance.
• Crop protection pricing pressure with low single digit decline expected for the full year.
• FX fluctuations, particularly related to the Brazilian real, impacting financials.

Q: Joel Jackson asked about risk upside/downside in the second half and quantification.

A: Chuck Magro said first quarter was better than expected, first half better than original plan, second half derisked since February guide, with crop protection in Brazil expected to do as well as last year, and CP pricing down low single digits factored in.

Q: Chris Parkinson asked about enthusiasm for seed portfolio and Latin America corn.

A: Judd O'Connor spoke about North America corn planted area potential, E3 performance, and Latin America summer corn expansion and licensing progress.

Q: Vincent Andrews asked about crop protection price environment.

A: Robert King and Chuck Magro discussed crop protection price softening, stabilization in China generics pricing, and healthy on-farm demand.

Q: Kevin McCarthy asked about wheat launch and winter canola pilot.

A: Chuck Magro spoke about hybrid wheat launch in 2027 with potential $1 billion revenue, and winter canola pilot expansion.

Q: Josh Spector asked about tariff impact assumption and Brazil real exposure.

A: Chuck Magro said tariff impact ~$50 million manageable, not in guidance; David Johnson discussed Brazil real exposure hedged over 80% for Q3 and under 20% for Q4.

Q: Emily Fusco asked about Corteva's position with Chinese soybean import shift and profitability.

A: Chuck Magro and Judd O'Connor talked about US soybean export hopes and ~$10-15 million EBITDA shift per million acre corn-soybean shift.

Q: Steve Byrne asked about out-licensing model and Asia corn seed.

A: Chuck Magro and Judd O'Connor spoke about over 100 licensees and APAC corn seed opportunity.

Q: Duffy Fischer asked about Conkesta E3 vs Intacta in Brazil.

A: Judd O'Connor discussed competitive technologies and multiplier opportunities.

Q: Patrick Cunningham asked about ag fundamentals concerns.

A: Chuck Magro talked about mixed ag fundamentals with positive planting, demand, and inventory but monitoring crop pricing margins.

Q: Jeff Zekauskas asked about corn hybrid import percentage and cash flow vs EBITDA.

A: Judd O'Connor said near 0% corn hybrid import in US, David Johnson discussed cash flow driven by Q4 cash credit mix uncertainty