The conference operator welcomes everyone to the Corteva Agriscience First Quarter 2024 Earnings Call and introduces the speakers. The Chief Executive Officer and Chief Financial Officer will be leading the call, with two other executives joining for the Q&A session. The company has prepared presentation slides and will be making forward-looking statements. They also mention the use of non-GAAP financial measures and provide a disclaimer about potential risks and uncertainties. The call is then turned over to the CEO.

The speaker is pleased with the progress of their strategic plan and is reaffirming their full year guidance. They see strong demand for their products and have a good start to the year in their Seed business. They are planning to bring new products to the market and expect a shift in planted area from corn to soybeans. The speaker also mentions the success of their Enlist technology and the competitive environment in Crop Protection.

The Crop Protection business has seen significant improvement since 2021, with plans to add new products and improve margins by 2024. The company's biological business has also strengthened its portfolio and there are plans to optimize their global crop protection assets. The industry is expected to see volume growth in the second half, driven by new products and cost actions. The company also expects to see benefits from self-help levers in the coming years. Corteva will soon celebrate its fifth anniversary.

The fourth paragraph of the article discusses the upcoming fifth anniversary celebration of Corteva, highlighting the company's impact on farms around the world and the value it has created for farmers, shareholders, and the world. The company has rolled out over 1,500 new products and technologies to its 10 million global customers, and has built a competitive agricultural technology portfolio with 23,000 employees. The financial results for the quarter were largely in line with expectations, with sales and operating EBITDA down from the previous year. Seed sales were up 2%, driven by pricing gains, while crop protection sales were down due to volume declines. Operating EBITDA was over $1 billion, but down 16% from the previous year.

In the first quarter of the year, seed volumes were down by 1%, with gains in North America being offset by declines in other regions. Crop protection net sales also decreased by 20%, mainly due to destocking and a shift to just-in-time purchasing. Crop protection volumes were down by 18%, while pricing was down by 3% due to competitive pressures and tight inventory management. However, there was a 4% increase in crop protection pricing in EMEA due to currency impacts. The mild weather in the US resulted in strong seed deliveries, leading to a strong operating EBITDA margin for the quarter. Overall, operating EBITDA was down by $200 million, largely due to volume declines and cost and currency headwinds.

The company expects to save $100 million in 2024 from lower input costs for Crop Protection. SG&A was up 1% due to acquisitions, but down 2% without them. For the first half of 2024, sales are expected to be down and EBITDA flat to slightly down, with Seed performing well and Crop Protection facing challenges. The second half is expected to see double-digit growth, driven by Crop Protection, and a rebound in Seed sales in Brazil.

In the second half of the year, the company expects to see a small EBITDA loss in the Seed division, while volume gains in Crop Protection will drive growth. This is due to market stabilization in Latin America, particularly in Brazil where new products and a decrease in channel inventories are expected to lead to increased demand at the farm gate. The company also anticipates cost savings in Crop Protection due to input cost deflation and cost optimization projects. However, there will be an increase in SG&A spend and R&D investment, but overall the company is on track to meet its full year EBITDA guidance.

The company expects total volume growth and a slight decrease in total pricing for the year, but remains on track to meet its full year guidance. The first quarter results were in line with expectations and the Seed business continues to perform well, driven by technology pricing and reduced net royalty expenses. The second half of the year is expected to see growth from cost actions and market improvements. The company also announced its 2024 Investor Day in November.

The speaker reminds the audience that the cautions on forward-looking statements and non-GAAP measures apply to both the prepared remarks and the following Q&A. The operator then provides instructions for the Q&A session. In response to a question, the speaker expresses confidence in bridging the first quarter to the second quarter, citing a good line of sight on the Seed order book and a positive outlook for the ag economy. The speaker also mentions the company's focus on "controlling the controllables" and targeting cost reduction and productivity improvements.

The company's Seed business is having a strong year, particularly in North America, and is expected to continue growing organically. The company is confident in its value creation framework and expects to meet its projected revenue for the year. In the first half, the company expects an improvement in Crop Protection but a decrease in revenue and EBITDA. The second half is expected to see a significant improvement in the biologicals business and a benefit from cost deflation in Crop Protection.

The speaker discusses the pricing dynamic in the US soybean market and notes that it is always competitive. They mention that their company operates at the high end of the market and focuses on selling a premium product. They also mention that soybeans have been more competitive than corn in recent years and emphasize the importance of getting paid for the value they deliver to customers. Overall, the speaker acknowledges the competitiveness of the market but expresses confidence in their company's ability to deliver value to customers.

The speaker explains that farmers are interested in high-performing products and the company has shifted its strategy to become a net technology seller. They have launched 300 new seed hybrids and varieties and are able to price for the value that farmers see in terms of productivity. The speaker also mentions that their out-licensing revenue is increasing. The speaker then directs the question to Tim to address the current dynamics and order book perspective in light of the uncertainty surrounding dicamba.

The company is seeing success with their Enlist franchise and expect to see even more benefits in the future. They are also expecting lower costs in their Seed business by 2025. The recent decision on the dicamba label had minimal impact on this year's crop, but there are uncertainties for next year.

The speaker explains that it is too early to predict the impact of dicamba on the market, but they have been monitoring their customers' reactions. Some farmers have already decided to switch to Enlist, while others are waiting to see what happens with dicamba. The company has prepared for potential changes in demand by planting their seed crop with room for upside, and they are staying in close contact with their customers. Overall, there is uncertainty in the market and the company is prepared for potential shifts in demand.

The speaker discusses the company's efforts to promote their technology and the upcoming seed selling season. They also address the issue of corn stunt disease in Argentina and its potential impact on the company's business, particularly in terms of insecticides and herbicides. The company has experience with this issue in Brazil and is monitoring the situation in Argentina, but their seed production was not affected.

The company is working closely with customers as they harvest their crops and make decisions for the upcoming season. They will need to evaluate the impact of leafhoppers on their corn crops and may wait to make planting decisions. The company's herbicide portfolio has shifted, with glyphosate being phased out, but they expect continued demand for their Enlist technology in North America. Overall, their herbicide volume is in line with expectations for the season.

The speaker discusses the impact of weather in Northern Europe on herbicide applications and wheat planting. They express confidence in the herbicide market for the full year and highlight the success of their Spinosyns franchise in the insecticide market. They also mention a $100 million royalty benefit expected in 2024, with the majority of it coming in the first half of the year. No comments are made on FX profitability impact for the second quarter.

The second part of the question is related to foreign exchange and the impact it had on the first quarter. The company was able to offset the impact of the Turkish lira through pricing on PVC. They anticipate a small benefit in currency for the second half of the year. The next question is about seed pricing outside of the US and how much of the price increase was due to like-for-like increases or upgrades to new hybrids and varieties. The company's strategy is to price for value and they plan to have 20-25% of their lineup in new genetics to give them pricing power.

The speaker discusses the pricing differences between Europe and North America, stating that while there may be some differences, both regions are priced fairly for their respective markets. They also touch on the latest updates on COGS for CPC and Seed, mentioning hedges and how they should be thought of in the upcoming years.

The company has seen an increase in costs due to the Seed business and expectations for higher volume in the second half of the year. However, they are on track for their overall productivity goal and anticipate cost deflation in the second half. The company is focused on controlling costs and this will set them up for improved performance in 2025.

The speaker discusses the current competitive landscape in the Crop Protection industry and mentions that there is a lot of tension due to global destocking. He also mentions that the US market is recovering, Europe is going through destocking and facing weather difficulties, and APAC has not been significantly impacted. The focus then shifts to Brazil.

The speaker discusses the current state of the market in Brazil, noting that it is still imbalanced but trending in the right direction. They also mention the importance of stable and healthy on-farm demand for Crop Protection globally. The speaker then hands over to Robert to address a question about Enlist and attach rates. Robert states that price competition is stiff, but their products continue to perform well. He also mentions strong demand for Enlist and expects volume growth this year. The speaker is then asked about generics in Brazil and explains that there was an influx of imports in 3Q, but a slowdown in 4Q. They do not provide an update on the current state in 1Q.

The generic imports into Brazil have stabilized and are a larger part of the market. However, Corteva's focus is on selling differentiation value and agronomic service. There is nothing that indicates a structural change in the market, and the company expects Brazil volumes to improve in the second half of 2024. When farmers have tighter budgets, they may trade down and only buy CP that they need.

The speakers discuss the trend of farmers choosing genetically modified crops (GMCs) with fewer GM traits and whether there are regional differences in this trend. Chuck Magro states that farmers prioritize production per acre and do not significantly trade down in seed technology or skip applications, even in difficult conditions. Tim Glenn adds that the technologies in seed are not just for yield, but also for the overall production system, especially in terms of biotechnology traits.

The speaker discusses the company's projections for 2025, including expected improvements in royalties and contributions from Biologicals and productivity actions. They also mention a potential $300 million from low single-digit seed pricing and other factors in the Crop Protection segment.

Dave Anderson, CEO of Corteva, was asked about the company's financial performance in the coming years. He reiterated the company's financial framework for 2025, with an expected EBITDA range of $3.9 billion to $4.4 billion. He mentioned that net pricing gains will be important, led by the Seed business, and Crop Protection will also see gains due to new products. The company will also benefit from deflation in raw materials and cost of sales improvements. There will be some offsetting costs, but the overall formula for success is intact. Anderson thanked the participants for their questions and looks forward to speaking with them in follow-up discussions.

The speaker expresses excitement for the upcoming Investor Day in New York City on November 19 and thanks the listeners for joining the call. The operator then ends the call.

This summary was generated with AI and may contain some inaccuracies.