Corteva, Inc. reported financial results for the quarter ended December 31, 2019 and the full year 2019.
WILMINGTON, Del., Jan. 30, 2020 – Corteva, Inc. (NYSE: CTVA) today reported financial results for the quarter ended December 31, 2019 and the full year 2019. The Company also provided 2020 guidance.
Full Year 2019 Results Overview
| GAAP | Net Sales | EPS | Income from Cont. Ops. (After Tax) |
| $13.8 B | $0.02 | $26 M | |
| v. FY 20182 | (3%) | +100%6 | +101%6 |
| Non-GAAP | Organic Sales1 | Operating EPS1 | Operating EBITDA1 |
| $14.3 B | $1.43 | $2.0 B | |
| v. FY 20182 | -% | (6)% | (4)% |
- Full year reported net sales for 2019 were $13.8 billion, down 3% versus the prior year, driven by currency.
- GAAP earnings per share (EPS) from continuing operations were $0.02 for the full year – and GAAP income from continuing operations after taxes was $26 million.
- Outside of North America,3 net sales in 2019 grew 1%, with an increase of 1% in Crop Protection and flat Seed sales. New product sales led to Rest of World organic sales1 growth of 7% in Crop Protection and 6% in Seed.
- Operating EBITDA1 was $2.0 billion, down 4% versus prior year, as weather-related declines in North America and currency impacts were partially offset by cost savings, gain on divestitures, and contribution from new products.
- Merger cost synergies were approximately $350 million for 2019, on track to deliver $1.2 billion by 2021.
- Corteva returned approximately $220 million to shareholders in 2019, in line with previous commitments.
“Our results show that we capitalized on the strength of our product pipeline to realize above-market organic growth especially outside of North America. We also delivered on our cost-synergy commitments and intensified our productivity actions. In our first six months as a stand-alone company, we demonstrated our collective strengths and our ability to navigate unprecedented market conditions to finish strong.”
“As we look forward, we expect more normal weather conditions in North America will set the stage for further performance improvements. We remain committed to driving shareholder value and financial results consistent with our stated priorities,” said James C. Collins, Jr., Corteva Chief Executive Officer
Company Updates
- Enlist E3™ Soybean Launch Accelerated: Corteva is accelerating the ramp-up of its Enlist E3™4 soybeans, as well as its Enlist One® and Enlist Duo® herbicides, in the U.S. and Canada. Solid commercial and research performance results for the system in 2019 support acceleration. More than 20 additional licensees have been signed in the fourth quarter for a total of 120 licensees.
- Conkesta Insect Control Trait Receives China Approval: Corteva received import authorization from China for the Conkesta™ soybean insect control trait in the fourth quarter. The trait approval had been in progress in China since 2014. The receipt of China import approval is a necessary step for commercialization of Conkesta E3™ in Latin America, which is on track for the early 2020s.
- Crop Protection Asset Sales Demonstrate Best-Owner Model: Corteva agreed to sell Chlorpyrifos assets in India; Bensulfuron-Methyl assets in Asia Pacific (excluding China); Quinoxyfen business assets; and a selection of U.S. herbicide brands during the fourth quarter. These actions are aligned with the Company’s commitment to driving an active portfolio management approach focused on margin expansion and shareholder value creation.
1. Organic sales, Operating EPS, Pro Forma Operating EPS, Operating EBITDA and Pro Forma Operating EBITDA are non-GAAP measures. See page 6 for further discussion. 2. First Quarter 2019 and prior year GAAP information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X. Non-GAAP measures for these periods are reconciled to the GAAP pro forma measure. 3. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa. 4. Enlist E3™ soybeans are jointly developed by Dow AgroSciences and MS Technologies™ 5. The company does not provide the most comparable GAAP measure on a forward-looking basis. See page 6 for further discussion. 6. Full year 2019 improvement over prior year for Loss from Continuing Operations After Income Taxes and GAAP EPS is primarily due to the absence of a goodwill impairment charge recognized in the third quarter 2018. See page 3 of the Financial Statement Schedules for further disclosure.
4Q 2019 Results Overview
| GAAP | Net Sales | EPS | Loss From Cont. Ops. (AT) |
| $3.0 B | $(0.06) | $(42) M | |
| v. 4Q 2018 | +6% | +94% | +94% |
| Non-GAAP | Organic Sales1 | Operating EPS1 | Operating EBITDA1 |
| $3.1 B | $0.07 | $224 M | |
| v. 4Q 2018 | 9% | +170% | +348% |
Summary of Fourth Quarter 2019
For the fourth quarter ended December 31, 2019, reported net sales increased 6% versus the same period last year, with organic sales1 increases of 9%.
Volumes increased 6% versus the prior-year period. Volume gains in both segments were driven primarily by North America as a result of stronger sales in multi-channel seed brands; penetration of EnlistTM herbicides in preparation for the 2020 planting season; and sales of new products in Latin America and EMEA3.
Local price increased 3% versus the prior-year period, with higher prices in Latin America due to favorable mix from PowerCore Ultra® sales. Currency was a headwind of 3%, primarily from the Brazilian Real.
The Company achieved approximately $50 million in merger-related synergies in the quarter.
GAAP loss from continuing operations after income taxes was $(42) million for the fourth quarter. Operating EBITDA1 was $224 million, a $174 million improvement versus the same period last year on a pro forma basis2.
Crop Protection operating EBITDA improvement reflects merger-related cost synergies, gains on divestitures, and higher sales. Seed Operating EBITDA improvement reflects pricing gains resulting from favorable mix, merger-related cost synergies and continued productivity.
The Company reported a loss of $(0.06) for GAAP EPS from continuing operations and operating EPS1 of $0.07 for the fourth quarter 2019.
| ($ in millions, except where noted) | FY 2019 | FY 2018 | % Change | % Organic Change1 |
| Net Sales | $13,846 | $14,287 | (3)% | - % |
| North America | $6,929 | $7,412 | (7)% | (6)% |
| EMEA | $2,740 | $2,765 | (1)% | 7% |
| Latin America | $2,889 | $2,817 | 3% | 8% |
| Asia Pacific | $1,288 | $1,293 | - % | 3% |
| ($ in millions, except where noted) | 4Q 2019 | 4Q 2018 | % Change | % Organic Change1 |
| Net Sales | $2,983 | $2,815 | 6% | 9% |
| North America | $1,129 | $978 | 15% | 16% |
| EMEA | $404 | $386 | 5% | 7% |
| Latin America | $1,109 | $1,083 | 2% | 8% |
| Asia Pacific | $341 | $368 | (7)% | (6)% |
Crop Protection Summary
Crop Protection net sales were $6.3 billion in 2019, down from $6.4 billion in 2018. The decrease was due to a 3% decline in currency and a 1% impact from portfolio, partially offset by a 1% increase in volume. Local price was flat.
Unfavorable currency impacts were primarily due to the Brazilian Real and the Euro. Volume gains driven by new product launches – including EnlistTM and ArylexTM herbicides, as well as IsoclastTM insecticide – were partially offset by unfavorable weather in North America, which resulted in lost spring applications.
Pricing gains from new product launches were offset by increased grower incentive program discounts in North America. The portfolio impact was driven by divestitures in North America and Asia Pacific.
Despite sales declines in 2019, Crop Protection pro forma operating EBITDA was $1.1 billion in 2019, essentially flat with 2018. Volume declines in North America, the unfavorable impact of currency and higher input costs more than offset cost synergies, sales from new products and ongoing productivity.
| ($ in millions, except where noted) | FY 2019 | FY 2018 | % Change | % Organic Change1 |
| North America | $2,205 | $2,438 | (10)% | (9)% |
| EMEA | $1,362 | $1,357 | - % | 7% |
| Latin America | $1,759 | $1,715 | 3% | 8% |
| Asia Pacific | $930 | $935 | (1)% | 3% |
| Total FY Crop Protection Net Sales | $6,256 | $6,445 | (3)% | 1% |
Crop protection net sales for the fourth quarter of 2019 were $1.7 billion, up 3% versus the prior-year period. The increase was due to an 8% increase in volume, which was partially offset by a 3% decline in currency, 1% decline in local price and 1% impact from portfolio.
Volume gains were primarily driven by new product launches, including EnlistTM herbicide, coupled with a strong demand for insecticides in Latin America. Unfavorable currency impacts were primarily due to the Brazilian Real.
Pricing gains from new product launches were more than offset by increased grower incentive program discounts in North America. The portfolio impact was driven by divestitures in North America and Asia Pacific.
Crop Protection operating EBITDA was $277 million in the fourth quarter, up from $169 million in the same quarter last year. Cost synergies, gains on divestitures, and volume gains more than offset increased selling costs and the impact of portfolio changes.
| ($ in millions, except where noted) | 4Q 2019 | 4Q 2018 | % Change | % Organic Change1 |
| North America | $643 | $594 | 8% | 9% |
| EMEA | $226 | $200 | 13% | 16% |
| Latin America | $615 | $613 | - % | 7% |
| Asia Pacific | $256 | $282 | (9)% | (7)% |
| Total 4Q Crop Protection Net Sales | $1,740 | $1,689 | 3% | 7% |
Seed Summary
Seed net sales were approximately $7.6 billion in 2019, down from $7.8 billion in 2018. The decrease was due to a 2% decline in currency and a 1% decline in volume. Local price was flat.
Unfavorable currency impacts were primarily due to the Brazilian Real, Eastern European currencies, and the Euro. Volume gains in corn in EMEA were more than offset by significant weather-related planting delays in North America, leading to a reduction in planted area for soybeans, and multi-channel and multi-brand rationalization impacts in North America.
Competitive pricing pressure in soybeans in the U.S. and increased soybean and corn replant in North America were offset by favorable mix and continued penetration of PowerCore Ultra® in Latin America.
Seed pro forma operating EBITDA was $1.0 billion in 2019, down 9% vs. the prior year. Competitive pricing pressure, the unfavorable impact of currency, increased commissions and input costs, and volume declines more than offset cost synergies and ongoing productivity.
| ($ in millions, except where noted) | FY 2019 | FY 2018 | % Change | % Organic Change (1) |
| North America | $4,724 | $4,974 | (5)% | (5)% |
| EMEA | $1,378 | $1,408 | (2)% | 6% |
| Latin America | $1,130 | $1,102 | 3% | 7% |
| Asia Pacific | $358 | $358 | - % | 4% |
| Total FY Seed Net Sales | $7,590 | $7,842 | (3)% | (1)% |
Seed net sales were $1.2 billion in the fourth quarter of 2019, up from $1.1 billion in the same quarter last year. The increase was due to an 8% increase in local price and a 5% increase in volume, partially offset by a 3% decline in currency.
The increase in local price was primarily driven by favorable mix in Latin America from PowerCore Ultra® and in North America due to pricing gains in corn and licensing incomes. Volume gains were driven by increased deliveries of multi-channel brands in North America.
Unfavorable currency impacts were largely driven by the Brazilian Real.
Seed operating EBITDA was a seasonal loss of $(26) million for the fourth quarter of 2019, as compared to a loss of $(87) million in the same quarter last year. Pricing gains on favorable mix and cost synergies and ongoing productivity were partially offset by higher input costs driven by higher royalties and lower production yields.
