The paragraph introduces the Corteva Agriscience Third Quarter 2024 Earnings Conference Call. Operator Ron begins by welcoming participants and explains the call's structure, including a Q&A session. Kim Booth, VP of Investor Relations, introduces key speakers: CEO Chuck Magro and CFO David Johnson, as well as other executives joining for the Q&A session. The call includes forward-looking statements subject to risks and uncertainties, and will reference non-GAAP financial measures with reconciliations available on the company’s investor website. Chuck Magro will now lead the presentation.

In the third quarter, Corteva experienced an expected operating loss but successfully executed its strategy, achieving significant savings and growth in its crop protection business through demand for its technology and deflation benefits. The company anticipates double-digit earnings growth by 2025, driven by its strong portfolio, focus on execution, and innovation investment. Despite seasonal challenges, Corteva generated substantial controllable benefits and positioned its seed business for continued growth through its technology pipeline, new hybrids, pricing, and market share gains, particularly in North America. The company plans to introduce several hundred new hybrids globally in 2025 to boost farmer yield and productivity.

In the crop protection sector, the company reports a second consecutive quarter of volume gains, EBITDA growth, margin improvement, and deflation benefits. They focus on new technologies and received over 150 crop protection registration approvals globally. Despite mixed agricultural markets and challenges in Brazil, the demand for food and fuel remains strong. The company updated its full-year operating EBITDA forecast to $3.4 billion, considering current Latin American conditions, including a decrease in Argentina's corn-planted area. They anticipate a significant fourth quarter in Brazil to meet the annual targets, aiming for a 20% EBITDA margin.

The article discusses financial commitments, including free cash flow and share repurchases, and provides preliminary insights for 2025. It anticipates strong demand for agricultural products and steady on-farm demand, with seed selection being critical for farmers. U.S. planted areas are expected to remain stable in 2025, while Brazil shows potential for increased corn and soybean planting. Uncertainty surrounds Argentina’s corn area recovery. The crop protection industry's outlook for 2025 is stable, and Brazil's ability to expand planting makes it an attractive market. The company plans to grow its crop protection business by focusing on biologicals and differentiated technology.

The paragraph discusses the financial performance of Corteva, focusing on their research and development investment and the impact of the crop protection industry on their financial expectations. Despite challenges affecting top and bottom lines, the seed business is performing as planned, aiming for an EBITDA margin target of 21% to 23% by 2025. David Johnson, the new CFO, provides an overview of the financial results, noting a 5% decline in organic sales for the quarter, with crop protection up 1% and seed down 17%. Pricing pressure and reduced corn area in Argentina affected seed volumes. Year-to-date sales were down 4%, with stable pricing, but seed organic sales increased by 1%.

The article discusses a decline in seed volumes and crop protection organic sales year-to-date, attributed to reduced planted areas in Argentina, EMEA, and Asia, along with competitive pricing pressures in Latin America. Despite some volume gains in Latin America and Asia, overall crop protection volumes decreased due to declines in EMEA and North America. The operating EBITDA is approximately $2.9 billion, down 5% from the previous year, with an operating margin remaining flat at 22%. Seed pricing gains were negated by crop protection pricing pressures, but improvements in net royalties, crop protection, and cost efficiency offset other cost challenges. The full-year guidance has been adjusted to reflect current Latin American market conditions, with expected net sales between $17 billion and $17.2 billion, slightly down from the previous year. This results in an operating EBITDA forecast of $3.35 billion to $3.45 billion, reflecting a 1% increase at the midpoint compared to the previous year.

The paragraph outlines financial expectations and projections for the agricultural company for the years 2024 and 2025. For 2024, operating EBITDA margin is anticipated to be around 20%, slightly higher than the previous year, while operating EPS is expected to decrease by 5%. The company reaffirms its free cash flow guidance of $1.5 to $2 billion. For 2025, the company's planning framework expects net sales between $17.3 billion and $17.7 billion, with operating EBITDA ranging from $3.6 billion to $4 billion. Factors influencing these projections include stable seed pricing, relatively flat planted areas in Latin America and North America, and steady growth in crop protection driven by new products, despite pricing pressures. Additionally, raw material deflation and productivity improvements are anticipated to benefit 2025 results, with SG&A and R&D costs expected to remain consistent with 2024 levels.

The paragraph outlines the company's financial projections and strategic initiatives for 2025, focusing on growth in earnings and margins for seed and crop protection. The operating EBITDA is expected to increase from approximately $3.4 billion in 2024 to $3.8 billion in 2025. Pricing is anticipated to be flat or slightly up overall, with seed prices rising modestly and crop protection prices declining. Both segments are expected to see volume growth. Cost improvements of approximately $400 million are projected, driven by lower seed commodity costs, crop protection raw material deflation, and productivity enhancements. There will be a $50 million improvement in net royalty expense through increased outlicensing income. Operating EBITDA growth is estimated at 12%, with a margin expansion of over 180 basis points. The company also expects currency headwinds affecting its performance due to the Turkish Lira and Brazilian Real.

The paragraph discusses the company's projections and financial expectations through 2027, anticipating continued benefits from current commodity prices, particularly in crop protection raw materials, with deflation expected in early 2025. These benefits, along with productivity savings and footprint optimization, are forecasted to translate to around $550 million, partially offset by increased production costs. The company is updating its full-year guidance for both seed and crop protection, expecting net debt to be around $3.4 billion at the midpoint, with $1.5 to $2 billion in free cash flow and $1 billion in share repurchases anticipated for 2024. A preliminary 2025 outlook includes sales, EBITDA, and margin growth. Upcoming Investor Day details are shared, scheduled for November 19th in New York City, featuring a webcast and innovation showcase.

The paragraph discusses upcoming topics for a meeting, including Corteva's leadership in the ag tech industry and plans for financial growth through 2027 and beyond. It mentions the opportunity to register for the event, and Chuck Magro mentions upcoming announcements about Corteva's growth trajectory. Chuck also announces a leadership change: Judd O'Connor will become the Executive Vice President for the seed business on December 1st, succeeding Tim Glenn, who will retire shortly after. Judd, a 25-year veteran, has extensive experience in the company, making him well-suited for the role. Finally, Kim Booth prepares to transition the discussion to a Q&A session, reminding the audience of the caution regarding forward-looking statements and non-GAAP measures.

The paragraph is a discussion from a conference call where Vincent Andrews from Morgan Stanley asks about the breakdown of a $150 million cost related to inflation and seed trade transition. David Johnson explains that two-thirds to 75% of these costs are associated with the seed business, particularly trade transitions, while about 25% fall under inflation. Chuck Magro elaborates on the trade transition costs, noting two major corn trade transitions in North America: from Qrome bore seed and from heritage trades to PowerCore Enlist. These costs are seen as part of the process of adopting new technologies over the next few years.

The paragraph discusses the challenges and adjustments faced by a company during a transition period. They mention the use of technologies like sterility to improve productivity, but due to the transition's pace, they will have to revert to older practices like detasseling, which will incur additional costs. This situation is expected to last for a couple of years until they reach a steady state with technologies such as AcreMax and Qrome. The conversation then shifts to a question from Joel Jackson about the company's 2025 guidance on seed and CPC cost deflation, which he perceives as lower than expected. Chuck Magro explains that they provided early guidance due to their upcoming Investor Day, where they will discuss future frameworks and technology opportunities beyond 2027.

The article discusses Corteva's financial outlook and strategy, highlighting expectations for the fourth quarter and upcoming years. Key takeaways include plans to release official guidance in February and a $600 million gross benefit driven by cost management, productivity, and deflation, including seed deflation over the next three years. Despite current higher seed costs, deflation is seen in CP (Crop Protection). The company anticipates double-digit EBITDA growth, margin expansion, and a shift from technology buyer to seller. Corteva expects flat CP market year-over-year and recognizes the need to bear some costs to achieve their strategic goals.

The paragraph features a discussion between Matt Hettwer and Tim Glenn regarding seed sales, focusing primarily on the Latin American market. Hettwer inquires about the seed sales deferred to the fourth quarter from the third quarter and their impact on earnings. Glenn explains that the usual pattern involves the bulk of Argentinian seed sales occurring in the third quarter and transitioning into the fourth quarter, while Brazilian sales span the third and fourth quarters, with Safrinha sales generally extending into the first quarter of the following year. Glenn highlights a significant 20% reduction in the Argentine market, noting it as lost business due to decreased area, where the company holds a nearly 40% market share. Similarly, he mentions a reduction in the Brazilian market, particularly its summer corn area, emphasizing that these reductions are not related to timing but are instead permanent losses in business. Safrinha sales, however, do not face timing issues and are expected in the fourth quarter.

The paragraph discusses the current state and future outlook of a seed business from the perspective of executives Chuck Magro and Tim. Despite challenges such as a reduction in seed area in Latin America and issues like the Argentina Cornstone problem, the company is pleased with its year-to-date performance, seeing gains in corn and soybeans in North America and improvements in EBITDA and margins. They express optimism about overcoming temporary setbacks due to advancements in technology and strategic changes over recent years. Additionally, there is a mention of a decrease in seed royalties for the next year, with progress being made towards achieving royalty neutrality as part of their strategic objectives.

The paragraph discusses the company's progress in achieving royalty neutrality ahead of schedule, projecting growth in royalty income and technology advancements. It highlights a successful transition to Enlist E3 soybeans in North America, leading to improved royalty positions. The company expects 2025 to be a significant year, with royalty income surpassing reductions. Although they are ahead of their $100 million annual goal, they plan to account for these gains this year rather than next. Future opportunities for reducing royalties will be less dramatic, with a focus on increased royalty collections being a major development.

The paragraph discusses the progress and challenges of PowerCore Enlist products and Conkesta E3 varieties in North and South American markets. In North America, PowerCore Enlist products have shown strong performance and demand, though there is a lack of a complete product portfolio. Future licensing of new technologies is expected to improve market presence. In Brazil and Argentina, Conkesta E3 is making progress, with over 25 varieties in the market and expected growth. Despite low penetration, there is one successful variety, Torrento CE, which has surpassed 1 million units sold in Brazil. The company anticipates accelerated adoption and increased contributions to the licensing market by 2025.

The paragraph discusses the company's positioning in the market and the focus on royalty collection as a future strategy. Christopher Parkinson from Wolfe Research asks about the company's EBIT outlook, noting both positive factors and potential challenges such as currency fluctuations, SG&A and R&D expenses, and lower U.S. acreage and CPC pricing. David Johnson responds by addressing currency concerns, noting that most currency issues are in Brazil, with the Real trading in the upper 5s, and acknowledges the unpredictability of future fluctuations.

In the paragraph, Chuck Magro and Chris discuss their financial projections for the company, providing a range of 3.6% to 4% for their estimates. They explain that this range is wider than usual because it's provided earlier, and achieving the lower end of 3.6% would require facing significant challenges such as market weakness and missing cost targets. Conversely, achieving the $4 billion mark would necessitate overachieving on controllables and seeing some market strength. Despite the early stage of these predictions for 2025, they highlight potential double-digit earnings growth and margin expansion based on their track record over the past five years.

The paragraph discusses the state of the crop chemical market and company performance. In 2025, volumes are expected to stabilize with mid-single-digit growth, while pricing might decrease slightly, leading to low single-digit overall sales growth. Chuck Magro highlights a positive third quarter, with North America showing strength and Europe and APAC operating normally, though Brazil faces instability due to weather and market conditions. The company saw a second consecutive quarter of volume growth and over 30% EBITDA growth in its crop chemical business, attributed to deflation and new technology, indicating some stabilization in the industry.

The paragraph discusses expectations for 2025 in terms of industry performance and company growth, highlighting anticipated volume growth driven by new technologies and biological investments. The overall market is described as healthy. Additionally, Tim Glenn addresses a question about a significant 25% year-over-year decrease in North American seed prices, explaining that this is due to end-of-season settlements related to replants, which are a regular part of the business. Replants occurred later than usual, impacting the third quarter more visibly than the second.

The paragraph is a discussion about the pricing environment for crop chemicals, particularly in Brazil, where prices saw a significant decline of 18%. An unidentified analyst, filling in for Steve Byrne from Bank of America, is inquiring about the reasons behind the rapid price deterioration. The analyst questions whether the price drop is due to efforts to regain market share, competition from imports and generics, or actions from competitors who might have already adjusted prices. Robert King responds by noting that for Crop Protection in Brazil, prices were down 10% in the quarter, but when looking at the year-to-date numbers, the decline is in the mid-single digits. This indicates that the third quarter was notably different for them in terms of pricing.

The company is preparing for the season amidst strong competition in Brazil, which led to an 18% decline in the quarter. Despite pricing remaining flat, the company aims to finish the year with mid-single digit growth by focusing on selling new and differentiated products, particularly in biologicals, where over 50% of their business is in Brazil. The company is optimistic about the fourth quarter, noting a strong position with over 50% of the order book filled for crop protection and 60-65% for biologicals.

In this paragraph, Patrick Cunningham from Citi asks about the performance of new products and biologicals year-to-date and their expected contribution in 2025. Robert King responds, noting that the biologicals business, acquired 15 months prior, is performing well and complements their synthetics business. For 2024, they're expecting double-digit EBITDA growth in biologicals. New products saw 20% organic growth in Q3, and they're projecting mid-single-digit growth for the year. Chuck Magro adds that these segments will drive growth beyond 2025 by focusing on differentiated technology within their crop protection business, despite market fluctuations.

The paragraph is part of a conversation between an analyst, Edlain Rodriguez, and Chuck Magro, discussing the company's guidance and outlook for 2025. Edlain expresses concern about the company's repeated downward revisions of guidance for 2024 and questions the confidence in meeting 2025 targets. Chuck responds by explaining that the revisions were due to a shift in their outlook for the Crop Protection (CP) industry, which they now expect to decline in 2024 and remain flat in 2025, rather than grow. Despite this, he mentions the seed business is performing well and ahead of plan, with cost productivity also exceeding expectations, indicating strong company performance in those areas.

The paragraph discusses the challenges faced by a company due to shifts in the CP industry, impacting their outlook. They aim for stability by targeting a 3.6% to 4% range for CP by 2025, contingent on industry conditions. Despite industry turbulence, they express confidence in their seed business and cost productivity efforts. The text also includes a Q&A with Tim Glenn addressing Argentina's 2025 planting season. Due to challenges like leaf hoppers, they have reduced their planting area estimate from 8 million to 6.5 million hectares and are cautious about expecting significant increases. However, there are indications that pest populations are decreasing.

The paragraph discusses the significance of Argentina as a key production area for corn and soybeans, emphasizing the importance of crop rotation between corn and beans to avoid long-term agricultural issues. The commentary is optimistic about agricultural prospects over the next few years, assuming a flat market in 2025. Following this analysis, a conversation with Arun Viswanathan from RBC covers financial strategies, where Tim Glenn and Chuck Magro express confidence in their current approach to managing the balance sheet, particularly in terms of free cash flow and the decision against taking on more debt, maintaining a consistent financial strategy moving forward.

The company is generating strong cash flow, with an improving conversion from EBITDA. They consider their investment-grade rating a strategic asset and plan to return around $1.5 billion to shareholders through buybacks and dividends this year. Additionally, they aim to invest in business growth, with promising developments in their seed and CP portfolio. More details will be shared at their Investor Day. These factors, they believe, differentiate Corteva from its competitors. The Q&A session and call have concluded.

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