The paragraph is an introduction to Corteva Agriscience's First Quarter 2025 Earnings conference call. The conference is led by Audra, the operator, and involves key speakers from Corteva, including CEO Chuck Magro and CFO David Johnson, among others who will join the Q&A session. The call includes prepared remarks and presentation slides available on their website. The discussion will involve forward-looking statements with associated risks and uncertainties, and references to non-GAAP financial measures, with reconciliations available in their earnings press release and on the Investor Relations website.

In the paragraph, Chuck Magro discusses Corteva's positive start to 2025, highlighting a 15% increase in Q1 EBITDA and significant margin expansion due to strong cost execution across Biologicals, CP new products, and seed out-licensing. Both company segments achieved double-digit EBITDA growth, driven by operational excellence. Corteva is on track to meet a $400 million cost target and reaffirms its full-year guidance. The US is expected to see a shift in crop area from soybeans to corn, with a projected 5% increase in corn planting. Enlist beans are dominating the US soybean market, and Corteva is progressing in becoming a leading soybean technology provider in Brazil with its Conkesta E3 soybeans. Industry-wide, there is strong demand for grains and oilseeds, with farmers investing in premium seed and crop protection technologies.

The paragraph discusses Corteva's performance and strategies for its seed and crop protection businesses. Despite broader market uncertainties, Corteva's seed business reported a strong start with a 2% increase in organic sales and plans for 500 new products. Cost improvements contributed to a nearly 400 basis-point margin enhancement. In crop protection, organic sales grew 3%, driven by volume growth in new products and Biologicals. Although the overall crop protection market is expected to be flat with minor pricing challenges, Corteva anticipates high single-digit volume gains. In Brazil, Corteva aims for consistent EBITDA contributions from its crop protection segment and highlights growth in the seed market, especially in soybeans and developments in corn.

Brazil's corn ethanol industry has experienced significant growth since its first plant opened in 2017, with production expected to nearly double by the next decade. By 2026, corn is projected to make up almost a third of Brazil's ethanol production, enhancing its position as the world's second-largest ethanol producer. This rise is also tied to Brazil's increasing safrinha corn output. Corteva addresses potential tariffs, noting a manageable direct cost impact of $50 million in 2025, mostly related to crop protection. While tariffs do not alter their current full-year guidance, Corteva is working on mitigation strategies. With a strong domestic manufacturing presence and global multi-sourcing capabilities, the company aims to reduce cost impacts. Nevertheless, Corteva expresses concern for American farmers, emphasizing their role in global food supply and hoping for open export markets for North American products.

The paragraph discusses the positive first-quarter performance of a company in the agricultural sector, emphasizing strong EBITDA gains and margin improvements despite market challenges. The company attributes its success to operational excellence and expects to achieve net cost improvements of $400 million through productivity and raw material advantages. Additionally, they anticipate $65 million in benefits from transitioning to a net out-licenser technology. The overall outlook for the first half of the year is better than expected, with manageable tariff situations. David Johnson then presents the financial results, highlighting strong organic sales growth, particularly in corn acres in North America, although currency posed a significant challenge.

In the recent quarter, seed pricing increased by 3%, except in Latin America where it decreased due to Brazilian market competition. Seed volumes fell by 1%, with increased corn planting in the US offset by decreases elsewhere, particularly in EMEA and Latin America due to seasonal sales timing. Crop protection saw a 2% price drop but a 5% volume increase, largely due to new products. Operating EBITDA rose 15% to almost $1.2 billion, thanks to organic sales growth, lower input costs, and productivity gains, despite currency challenges. Progress toward royalty neutrality continued with a $20 million decrease in net royalty expense, facilitated by higher out-licensing income and lower licensing costs. Seed and crop protection achieved over $200 million in productivity and cost benefits. SG&A increased slightly due to higher compensation and debt accruals, while R&D investment is on track to reach 8% of sales for the year. Currency fluctuations partially offset higher costs.

The paragraph discusses the financial outlook for a company, noting a $90 million EBITDA impact due to currency fluctuations related to the Turkish lira and Canadian dollar. The company experienced strong growth in seed and crop protection in the first quarter and anticipates various factors influencing full-year results. In the US, corn planting is still underway, affecting the final outcome, while Brazilian and Argentine corn areas are expected to increase. Crop protection prices are forecasted to slightly decrease, but this will be offset by volume growth, particularly in biologicals and new products. Although tariffs and global trade policies pose uncertainties, they are not expected to affect the company's full-year guidance. Key assumptions for both halves of the year are outlined, with the focus on managing potential risks and growth opportunities.

The company anticipates that net sales for the first half will be flat compared to the previous year, with operating EBITDA rising in the low to mid-single digits due to favorable timing, cost benefits, and increased volume. The seed segment is expected to continue its momentum, particularly in North America, with strong organic growth led by corn acreage and a robust product lineup. Crop protection is predicted to achieve solid volume growth, including double-digit increases in Biologicals and new products, despite pricing pressures. Lower input costs will benefit both seed and crop protection, although SG&A is expected to rise modestly. R&D spending will remain stable in the first half. For the second half, the company expects strong sales and operating EBITDA growth driven by low single-digit price increases and double-digit volume growth. Seed will drive growth through price and volume gains, particularly in Latin America, while crop protection will face a slight price decline but will still achieve double-digit sales volume growth, led by Latin America.

The company anticipates continued cost savings in the second half of the year, though at a slower pace than the first half due to factors such as crop protection, deflation, productivity, and the seasonal nature of the seed business. Tariffs are not expected to impact the full-year financial guidance, with associated costs mainly affecting the second half. Inflation and currency issues, particularly the Brazilian real, will present challenges, with about half of the year's currency impact expected in the latter half. Despite modestly lower pricing gains, volume is projected to rise, driven by increased North American corn acreage and strong crop protection demand. The company remains on target for a full-year operating EBITDA of $3.7 billion, having already exceeded expectations in the first quarter through organic sales growth and cost savings, achieving a 390 basis points margin expansion.

In the discussed paragraph from an earnings call, the company highlights strong first-quarter cash flow, supporting their free cash flow to EBITDA guidance of 40% to 45% conversion rate, and a commitment to $1 billion in share repurchases by 2025. During the Q&A, Joel Jackson from BMO Capital Markets questions the risks in the second half of the year based on the current earnings pace and seeks clarification from Chuck Magro on potential variances. Chuck acknowledges that the first quarter exceeded expectations with significant EBITDA and margin improvements but emphasizes that the first quarter doesn't determine the entire year's performance and expresses reluctance to revise guidance this early.

The paragraph discusses the company's optimistic outlook for the first half of the year, expecting it to perform better than originally planned. The second half has been made less risky since the February guidance, relying on Crop Protection in Brazil to replicate last year’s performance. The guide remains unchanged but is considered significantly de-risked, with CP pricing expected to decline in the low single digits for the full year. The overall sentiment is positive, and an update will be given after the first half. David Johnson adds that their original guidance anticipated a 10% EBITDA growth over the prior year, with the first half initially expected to be flat compared to the previous year.

The paragraph discusses the company's financial performance and expectations for the year. They anticipate a 4% to 5% growth, with a 40% increase over the previous year, though the monetary impact might be smaller in the second half. Much of the growth is expected in the seed segment. They predict a $300 million increase in EBITDA year-over-year, with similar results in both halves of the year. Foreign exchange impacts are in line with earlier projections of $275 million, with the first quarter contributing as expected. The focus is on Brazilian real exposure in the second half. There's a challenge with softer-than-expected crop protection pricing, which they plan to counteract with higher volumes.

The paragraph discusses the company's strategic focus on its seed portfolio, highlighting recent successes and future potential in both the United States and Latin America. Despite skepticism about further growth, there remain several upcoming product launches and opportunities, particularly with corn planting in Latin America. The company is making a strategic shift from being a net importer and licensee of technology to becoming an out-licenser, with significant traction noted in this area, particularly with their Enlist technology in various regions and crops like Brazil, corn, and canola.

The paragraph discusses future growth opportunities for agricultural production, particularly highlighting the potential of hybrid wheat, which could generate $1 billion in revenue in the next three years. Judd O'Connor elaborates on North America's favorable conditions for planting corn, with projections of 95 million acres due to strong product portfolios and market conditions. Excellent E3 performance and soybean germplasm are also noted. In Latin America, there's an expansion in summer corn planting for the first time in years, spurred by solid local economics and ethanol expansion in Brazil. Safrinha corn planting is expected to continue growing at a low to mid-single-digit rate, with revenue expected to be recognized after the new year. Overall, 2025 is anticipated to be a year of solid growth for these regions.

The paragraph discusses a company's positive developments in agriculture, particularly in Latin America and North America. They are expanding their market presence in Brazil with new germplasm and Conkesta E3, which is expected to enhance market share and margins. There is strong demand from Latin America, with their summer and safrinha book surpassing previous years. The conversation then shifts to Chuck Magro and Robert King discussing the crop protection price environment. Robert explains that while prices are still negative, they are stabilizing, particularly due to consistent generic pricing from China, indicating potential stabilization in the market.

The business has experienced low single-digit organic growth over decades and aims to return to that trend, contingent on China's economic stabilization and tightened supply. The company's growth is expected to stem primarily from its higher-margin Biologicals and new products, which farmers are increasingly adopting. Pricing remains favorable but may soften throughout the year. Stability seems to be returning to the market after unprecedented fluctuations, with healthy volumes and strong demand from farmers. Market competition remains high, with a well-supplied channel and higher interest rates making channels more selective.

The paragraph discusses the positive outlook for the price volume dynamics in the industry, particularly noting the need for an increase in generic pricing to aid the sector's recovery. It highlights optimism about the recovery in Brazil, an important market for Corteva, due to the expansion in acreage and an improving channel. Additionally, the text touches on updates from Corteva on its growth platforms, specifically hybrid red winter wheat and winter canola for biofuels. Corteva is excited about the potential of hybridizing wheat, akin to past advancements in corn, which could significantly impact global food security and farmer economics. The company expects to harvest its test plots for this hybrid wheat soon.

The paragraph discusses Corteva's initiatives and developments. The company plans to unlock a yield between 10% and 20%, aiming to lead by providing and licensing technology, with a 2027 launch target promising $1 billion in revenue at its peak. Corteva's winter canola pilot program in the southern US is progressing well, showing potential for biofuels. The program is expanding significantly, offering farmers a profitable choice between winter wheat and canola. Corteva collaborates with Bunge and Chevron, where Bunge processes canola into oil, and Chevron converts it to biofuels, benefiting all parties involved. The paragraph also mentions confusion from UBS analyst Josh Spector about accounting for a $50 million tariff impact not included in guidance, alongside a quick follow-up on foreign exchange matters.

In the paragraph, Chuck Magro discusses Corteva's approach to mitigating the impact of tariffs, reducing the macro tariff impact to approximately $50 million. Although not included in the current guidance range, the company plans to finalize actions to mitigate this impact further and will update the market as necessary. David Johnson discusses the Brazilian real exposure, noting that most of it is in the latter half of the year. Currently, the company is hedged at over 80% for the third quarter and just under 20% for the fourth quarter, with hedging efforts continuing as exposures become clearer throughout the year.

In the paragraph, Chuck Magro and his team discuss their current position and expectations regarding soybean exports, particularly in relation to changes in Chinese import preferences shifting from the US to Brazil. Magro notes that US farmers are prioritizing corn planting due to favorable economics, although a significant portion of US soybeans are exported mainly to China, Mexico, and the EU. Corteva is observing current market trends and is hopeful for a rebound in export markets by harvest time to facilitate global exports of US soybeans. The competition mainly comes from Brazil and Argentina, which are also major soybean exporters.

The paragraph discusses the global demand for soybeans and the role of US production in meeting it. Despite Brazil and Argentina's contributions, US production is crucial. There's potential for premium pricing for soybeans from Latin America. Judd O'Connor from Corteva notes the positive economic outlook for corn in both North and Latin America, with an increase in US corn acreage and expansion in Brazil. Soybeans also have solid economics due to lower input costs. A shift from soy to corn can significantly impact Corteva's earnings. Steve Byrne from Bank of America asks about Corteva's out-licensing model targeting the US corn seed market and the use of the PowerCore trait, questioning its impact in Asia too.

The paragraph discusses opportunities for expanding seed sales and licensing in different regions. Chuck Magro highlights the potential $4 billion market for corn and soybean licensing, primarily driven by the US and Brazil, and notes the company's growing presence in this area through technology like PowerCore. He sees no reason they can't capture a meaningful portion of this market globally. Judd O'Connor addresses opportunities in the Asia-Pacific (APAC) region, noting that while they currently have limited participation in some markets, there's potential for expansion, especially as more countries adopt advanced technologies like gene editing and GMOs.

The paragraph discusses a company's strategy for expanding its presence in the Brazilian agricultural market by promoting its Conkesta E3 technology compared to the competing Intacta product. The company emphasizes the competitive advantages of its technologies, including the use of 2,4-D versus dicamba, and highlights the benefits of working with seed multipliers and licensees. This approach is aimed at rapidly increasing market penetration and providing more options to growers and multipliers, allowing the company to distribute its technology to more users quickly. The company is in the early stages of this strategy, which it believes will enhance its market position.

In the paragraph, Patrick Cunningham from Citi inquires about the impact of commodity cost inflation on the company's financial performance and the offsetting effects of productivity and trade launches. Judd O'Connor responds by explaining that seed production costs decreased due to a combination of improved commodity prices and productivity efforts, with significant improvements in licensing fees for soy. David Johnson adds that they anticipate $200 million in savings for the full year, with $100 million realized in Q1, and expects similar cost savings in the second half of the year, despite new trade introduction costs. Overall, cost reductions are front-loaded in the first half of the year, with deflation starting to stabilize.

The paragraph discusses the current state of global agricultural markets. Chuck Magro highlights that planting has been successful and there is an anticipated record demand for grains and oilseeds, particularly corn. Global inventories for crops like corn are tight, prompting more planting. Overall, farm demand for top hybrids, varieties, and branded CP technologies is strong. However, there is concern over declining crop prices, which have reduced margins, particularly in the United States. In contrast, Brazilian farmers are experiencing higher crop prices and margins, leading to positive agricultural fundamentals in Brazil.

The paragraph discusses the current state and outlook of the farming and agricultural sector. It mentions that farmers typically invest in technology when economic conditions tighten, which is presently observed. While there is strength in the agricultural fundamentals, there is a cautious watch on the geopolitical and macroeconomic landscape, particularly concerning export opportunities for harvested grain in the second half of the year. The paragraph also notes that commodity trading prices might be affected by these factors. Additionally, CP pricing is expected to decline in low single digits for the year, reflecting in the industry guide. When queried, it was clarified that corn hybrids sold in the US are not imported, thus not subject to tariff penalties. The paragraph ends with a discussion on the difficulty of predicting cash flows compared to EBITDA, reflecting a concern raised by Jeff Zekauskas from JPMorgan.

The paragraph discusses Corteva's operations, highlighting that most of their seed production is local, minimizing tariff impacts. David Johnson explains that their cash flow is largely positive in Q4 due to factors like the cash credit mix, which is better understood later in the year. Compared to the previous year, Q1 shows a $500 million improvement, attributed to higher EBITDA and better control over working capital. The Q&A session concludes, followed by closing remarks from Kim Booth, thanking participants and concluding the call.

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