The paragraph introduces a conference call for Corteva, Inc.'s Q4 2024 earnings report. The operator, Janine, welcomes participants and explains the process for asking questions. Kim Booth, Vice President of Investor Relations, then introduces the speakers, including CEO Chuck Magro and CFO David Johnson. Additional executives, Judd O'Connor and Robert King, will join for the Q&A. The call features prepared remarks and accompanying presentation slides available on the company's website. Forward-looking statements will be made, which involve risks and uncertainties, and actual results may differ. There is a disclaimer about non-GAAP financial measures and a note that the company does not commit to updating these forward-looking statements.

The paragraph discusses the company's financial performance and market outlook. Chuck Magro highlights key points, including the positive Q4 results and improved agricultural fundamentals leading to favorable 2025 guidance. The company's portfolio of advanced seed and crop protection technologies is in high demand, enabling it to deliver its 2027 financial framework. Despite challenging market conditions, the company achieved a 20% operating EBITDA margin in 2024 and maintained flat operating EBITDA year over year. Strong performance was noted in crop protection with significant sales growth, especially in Brazil, and the seed business maintained its leadership position in the US, gaining market share in corn.

In 2024, Enlist E3 soybeans achieved 65% market penetration in the US, contributing to $1.9 billion in sales for the Enlist system despite a competitive market. New products in Spinozan and biologicals showed significant volume gains, supported by strong demand, cost discipline, and healthier farmer incomes, leading to a $500 million improvement in operating free cash flow, totaling $1.7 billion. The company returned $1.5 billion to shareholders via dividends and share repurchases, with plans for another $1 billion in 2025. Despite challenges in the crop protection industry, strong performance in Brazil provides optimism. The global agricultural market remains robust, with record consumption and high demand for grains, oilseeds, and biofuels expected to continue into 2025.

Strong production, particularly record corn yields in the US and expected similar yields in Brazil, has boosted farm sector income and improved farmer margins significantly. Despite grain prices rebounding, the global corn market remains tight, the tightest in decades. On-farm demand and stabilization in the crop protection industry, exemplified by stable pricing from China and balanced inventory levels, provide positive outlooks. Corteva, Inc. has seen volume gains for three consecutive quarters, reinforcing confidence in a flattish market in 2025 with low single-digit volume growth, despite low pricing headwinds and currency challenges related to the Brazilian real and Canadian dollar. The strong US dollar is expected to affect agricultural economies but Corteva anticipates top and bottom-line growth, margin expansion, and a focus on cost control, maintaining the target of $550 million in gross improvements by 2025.

The company anticipates benefits from self-help actions and royalty improvements, enabling continued investment in R&D and innovation, with plans for 10% EBITDA growth, margin improvement, and strong cash flow in 2025. A significant $1 billion share repurchase is planned, supported by strong demand for crops, improved farmer margins, and increased corn acreage in the US. The focus is on the seed business, expecting growth due to demand for technology that boosts yields amid volatile weather and pests. The company plans to launch 300 new seed hybrids and sees seed margin improvement through mix, royalty income, and cost benefits. For crop protection, they assume a stable market and observe positive volume trends, while pricing stability remains a key factor to monitor.

The paragraph outlines the growth expectations and strategic plans for a crop protection business. The company anticipates mid-single-digit organic sales growth overall, driven by new products and double-digit growth in biologicals, with a goal of reaching $1 billion in biological revenue by the end of the decade. Brazil is highlighted as a key market, especially for corn and soybean products. The company plans to increase revenues by $1 billion from 2025 to 2027 through three main growth platforms: out-licensing income, CP product ramp-up, and biological growth. Additionally, they are implementing a program aimed at achieving $1 billion in productivity and cost benefits, while also targeting an annual EBITDA margin growth of 100 basis points. By 2027, the company expects a 9% CAGR in EBITDA, reaching margins of 23% to 24%. The focus is on executing a strong year in 2025.

The seventh paragraph of the article discusses the financial performance for the fourth quarter and full year 2024. In the fourth quarter, organic sales increased by 13%, with seed and crop protection sales up 16% and 11%, respectively. Despite a 4% price decline driven by competition in Brazil, volumes grew significantly, particularly in Latin America and EMEA. For the full year, organic sales grew by 1%, with seed sales up 4% due to higher volumes in Brazil and North America, while crop protection sales declined by 2% due to lower prices. Operating EBITDA remained flat at approximately $3.4 billion, with a slightly improved margin. The paragraph concludes by directing the reader to the next slide for further details on the full year EBITDA performance.

The paragraph discusses the company's financial performance and guidance. Despite lower prices in crop protection, there was increased volume in both seed and crop protection, particularly in Latin America. Cost savings of nearly $500 million, mainly from lower net royalty expenses and raw material deflation, outweighed cost increases in seed commodity and other costs. SG&A expenses rose slightly due to biological acquisitions and bad debt normalization, while R&D expenses aligned with expectations. The company achieved a 20% operating EBITDA margin. For 2025, they project an operating EBITDA between $3.6 billion and $3.8 billion, a 10% increase at the midpoint, driven by price, product mix, and cost efficiencies. Operating EPS is forecasted to rise by 10%, ranging from $2.70 to $2.95 per share. Free cash flow to EBITDA conversion rate is expected to match the 2023 and 2024 average, influenced by higher earnings and normalized working capital use.

The paragraph outlines the financial expectations for 2025, highlighting an increase in operating EBITDA from $3.4 billion in 2024 to a midpoint of $3.7 billion in 2025. Pricing is projected to be stable or slightly increase, with gains in seed offset by declines in crop protection. Despite expected low single-digit price drops in crop protection, volume growth is anticipated in both seed and crop protection, driven by factors like increased corn acreage in North America and new product demand. The company forecasts a $50 million improvement in net royalty income and $400 million in cost savings due to reduced seed and raw material costs, and productivity enhancements. SG&A and R&D spending is predicted to stay consistent as a percentage of sales. Currency fluctuations, particularly with the Brazilian real, Turkish lira, and Canadian dollar, are expected to create a low single-digit headwind on net sales and a $275 million impact on operating EBITDA. Overall, a 10% growth in operating EBITDA and a 100-150 basis point margin expansion is anticipated.

In 2025, approximately 60% of sales and 80% of EBITDA are expected in the first half of the year, with variations in timing between the first two quarters due to seed delivery schedules in Latin America and EMEA and normal seasonal delivery in the Northern Hemisphere. Currency fluctuations, particularly a stronger dollar, could pose challenges to operating EBITDA, but efforts such as pricing adjustments are planned to mitigate these effects. Market conditions suggest a relatively stable global planted area, with growth anticipated in North American corn and Brazil's safrinha, while crop protection markets remain flat. Corteva, Inc. expects volume growth from new products and biologicals, despite price pressures, and plans to implement cost improvements and maintain consistent SG&A and R&D expenses as a percentage of sales relative to 2024.

The paragraph discusses the company's financial performance and future outlook. It mentions that while trade policy impacts are not yet included in their guidance due to uncertainty, the company remains confident in its ability to grow sales and operating EBITDA by 2025. Highlights include record Q4 operating EBITDA, growth in Crop Protection with a strong portfolio strategy, and a positive full-year outcome for the seed portfolio. The company also achieved $1.7 billion in free cash flow and maintained a strong balance sheet, enabling continued cash returns to shareholders, including $1.5 billion in 2024. The 2025 guidance indicates controlled growth aligning with their long-term strategy. The paragraph ends with a transition to a Q&A session.

The paragraph discusses the current positive market conditions for crops, particularly corn and soybeans, compared to previous months. Christopher Parkinson from Wolfe Research raises questions about the impact of these conditions on the company's guidance, noting changes since November. Chuck Magro responds by acknowledging the improving fundamentals, citing strong demand for crops and better crop prices, especially for corn, where the market is experiencing tight stocks-to-use ratios. He refers to the current year as "the year of corn" due to increased planted area and improving, albeit not excellent, farmer margins.

The paragraph discusses the recovery and current state of the CP (crop protection) industry, noting improvements in inventory balance worldwide. Despite challenges in previous years, there is still some expected downward pressure on prices, especially in the first half of the year. The conversation mentions potential upsides and downsides, including the effect of the US dollar and anticipated low single-digit negative pricing in 2025, which is an improvement over 2024. Additionally, there is an expected net $400 million improvement from self-help actions. Overall, the company anticipates a balanced outlook with 10% midpoint EBITDA growth. The paragraph ends with a transition to a question from Vincent Andrews of Morgan Stanley.

The paragraph discusses the company's recent production cost performance in crop chemistry (CP) and seed production. It highlights that the CP production costs were lower than expected, reflecting the success of a multiyear plan to improve efficiency and reduce structural costs, led by Robert King. In contrast, seed production costs were higher due to high-cost inventory in Latin America resulting from poor yields and quality issues in 2023. The company made strategic decisions to address these issues by 2025. Chuck Magro provides these insights before passing the details to Robert and Judd for further explanation.

The paragraph discusses the company's progress toward its 2027 cost reduction commitments, highlighting a planned $200 million reduction in 2025 and a target of a $300 million run rate by 2027. Raw material deflation contributed $100 million in cost savings in the past year, with expectations for continued improvement. Despite competitive markets and high-cost inventory issues in Latin America, overall price gains were achieved globally, and the company's COGS position in Brazil is expected to improve significantly in 2025. The outlook for 2025 appears positive following a challenging 2024.

In the paragraph, Joel Jackson from BMO Capital asks about the expected pattern of earnings growth throughout the year. David Johnson responds by explaining that the first half of the year is expected to perform slightly better compared to the first half of 2024, with more significant improvement anticipated in the second half, especially in the fourth quarter. This improvement is attributed to factors like Brazil's seed cost position. Additionally, negative pricing early in the year is expected to flatten out by the second half. Then, Kevin McCarthy from Vertical Research inquires about the significant increase in crop protection EBITDA margins, asking for details on the key drivers of this growth, mentioning technology uptake in Brazil as a potential factor.

In the paragraph, Robert King discusses the strong performance of the crop protection business in Q4, marking it as a record quarter, especially notable in Brazil. The growth was driven by sales in biologicals, new products, and spinosin, contributing to margin increases compared to the previous year. Fungicide and insecticide sales showed strong growth, benefiting from higher margins compared to herbicides. Additionally, $170 million in costs were cut year-over-year, further strengthening the quarter. This positive performance sets momentum for moving into 2025. Following King’s remarks, Josh Spector from UBS asks for clarification on the 2025 guidance, noting that while foreign exchange (FX) was a major change, the guidance's top end was lowered by $200 million without adjusting the bottom end.

The paragraph discusses adjustments in financial projections, explaining a $200 million reduction at the top end of guidance and a $100 million adjustment at the midpoint. David Johnson explains that these adjustments account for currency exchange impacts and slight improvements in price and volume. The lower end of the range remains unchanged, with potential downsides tied to further US dollar strengthening, changes in planted acres, and the CP market outlook for 2025. Chuck Magro adds that the initial wider range was based on early expectations of CP market growth, which now appears flat. Currency impact is significant, amounting to $275 million.

In the paragraph, David Begleiter from Deutsche Bank asks Chuck Magro about the possibility of separating Corteva, Inc.'s seed and crop protection segments to enhance equity value, given the company's significant focus on seeds. Chuck Magro, the CEO, responds that while they're open to exploring all options for long-term value creation, the company benefits from the integration of its seed and crop protection offerings. This integrated approach, which includes R&D and market strategies, provides synergies and value to global farmers by offering a comprehensive solution. However, Magro emphasizes that he remains open to all strategic possibilities.

The paragraph is a discussion during a conference call where Salvador Keanu, filling in for Steve Byrne from Bank of America, asks about the outlook for dicamba and its potential impact on guidance, given the upcoming planting season in the south. Judd O'Connor responds, noting that there is no new information regarding dicamba registration, and it’s too early to make any assumptions. However, the order book for their E3 products is strong, especially in regions that have traditionally used dicamba due to the soy cotton rotation. Nevertheless, no upside from dicamba has been included in the current guidance assumptions.

The paragraph is a transcript of a financial call discussing market trends and strategies. It mentions a 65% market penetration without considering potential growth from dicamba by 2025. Rachel Leon, speaking for Patrick Cunningham of Citi, asks about the shift to just-in-time purchasing behavior, which Robert King attributes to high interest rates and product availability, expecting it to continue. Edlain Rodriguez from Mizuho asks about competitive pressures in the seed market in Latin America, which Judd O'Connor explains are driven by a strong supply position among competitors and the increase in safrinha acres, anticipating this competition to persist, especially in the crucial second half of the year for their seed business.

The paragraph discusses the company's positive outlook for 2025, highlighting improvements in their cost of goods sold (COGS) and pricing strategies, particularly in Brazil. Chuck Magro emphasizes the competitive nature of the Brazilian market and the willingness of farmers to pay for better yield through advanced seed technology. He mentions that the poor yields and quality in 2023 were addressed by clearing inventory to ensure a healthier business in 2025. Additionally, there's an expectation of increased safrinha acres. Frank Mitsch from Fermium Research questions the company's working capital, noting unusual inventory movements between quarters, and seeks insights into expectations for 2025.

In the article, David Johnson discusses the company's financials, noting a $1.7 billion free cash flow for the year, with a $300 million tailwind largely attributed to inventory adjustments from the previous year. He explains that the company had excess inventory entering the year and that increased volumes in Q4 contributed to this situation. Looking ahead to 2025, Johnson anticipates a $100 million headwind due to core working capital returning to normal levels. Ryan Weis from KeyBank then inquires about risks related to raw material sourcing and tariffs, particularly involving Canada, Mexico, and China. Chuck Magro responds by emphasizing the complexity of the situation and mentions that the issue primarily affects their CP (crop protection) supply chain due to its global nature, whereas corn is impacted differently.

The paragraph discusses Corteva Inc.'s business outlook, focusing on its operations primarily based in the United States, with a small portion (2%) of its cost of goods sold (COGS) linked to China, of which 80% is multi-sourced. Corteva is seen as a net exporter with future scenarios considered manageable despite uncertainties. The conversation shifts to North American crop protection, where volumes and prices were stable in the fourth quarter. Concerns have been mentioned about cautious buyer patterns among retailers and growers. However, the company anticipates benefits from increased corn planting and improving farmer margins, despite current tight inventories.

The paragraph discusses the overall positive sentiment in North America's crop protection market, highlighting improved conditions for farmers and commodity prices. Inventories are balanced, and product movement is strong as preparations for the North American planting season continue. There is optimism about new product growth, especially in biologicals, and confidence in channel inventories and demand. Additionally, a question is asked about foreign exchange hedging practices, with a response indicating that the company usually hedges currencies within the same year.

The paragraph discusses a company's financial strategy for managing currency exposure and capital deployment. The company has significant exposure to the Brazilian Real (BRL), comprising about 40% of its total impact in 2025, and has hedges in place to provide consistency within the year's quarters. Currently, the exchange rate is slightly above their hedged rate, but their exposure is more concentrated in the latter half of the year. The company expects exchange gains and losses (EGL) to be proportional to EBITDA, suggesting slightly higher EGL in 2025 compared to 2024. Regarding capital deployment, they plan to execute $1 billion in share buybacks evenly throughout the year, similar to the previous year, and along with dividends, aim to return $1.5 billion to shareholders, from an estimated $1.6 billion in free cash flow.

The paragraph discusses Corteva, Inc.'s plans to continue investing in their catalyst program and explore opportunities in mergers and acquisitions (M&A). The company ended the year with a higher cash balance of $3.1 billion, providing more flexibility for smaller acquisitions. The paragraph also includes the conclusion of a conference call, where participant Ben Theurer from Barclays mentioned that all questions have been addressed. Kim Booth thanked the participants for their interest in Corteva, and the call was concluded.

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