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Corteva Agriscience Reports Second Quarter 2019 Operating Results - Capitalizes on Strong Performance Outside North America; Company Updates Full Year Outlook

08/01/2019
- GAAP earnings per share (EPS) from continuing operations was $0.63, with operating EPS¹ of $1.42.
- The Company delivered net sales of $5.6 billion, down 3 percent versus the same quarter last year, primarily due to unprecedented weather impacts in North America².
- Outside North America, favorable conditions supported strong organic sales¹ growth in both Crop Protection and Seed, up 21 percent and 10 percent for the quarter, respectively.
- GAAP net income from continuing operations totaled $0.5 billion, down 50 percent versus the same quarter last year on a pro forma basis³. Operating EBITDA¹ was $1.5 billion, down 6 percent versus the same quarter last year on a pro forma basis, with operating EBITDA improvement in Crop Protection from new products and cost savings from synergies offset by currency headwinds and lower Seed results due primarily to declines in the North American market.
- The Company realized cost synergies of approximately $200 million for the six months ended June 30, 2019, bringing the cumulative realized savings since merger close to $700 million out of the total $1.2 billion that are expected by 2021.
- During the first half 2019, the Company announced new regulatory approvals in Seed, together with new and expanded registrations across the Crop Protection portfolio, including the expanded federal label from the U.S. Environmental Protection Agency for Transform® WG insecticide with Isoclast™ active.
- Full-year pro forma operating EBITDA¹ is now expected to be in the range of $1.9 billion and $2.05 billion, guidance updated as a result of the impact from unprecedented weather events driving reduced crop planting and loss of early season crop protection applications in North America. Net sales for the full year are expected to be down 3 percent.

WILMINGTON, Del., Aug. 1, 2019 /PRNewswire/ -- Corteva, Inc. (NYSE: CTVA) today reported financial results for the quarter ended June 30, 2019 and provided updated guidance for the full year.

(PRNewsfoto/DowDuPont)

Commenting on the Company's second quarter 2019 performance, Chief Executive Officer Jim Collins said, "On June 1, 2019, we completed an important separation milestone, becoming a global, standalone, pure-play agriculture company - taking this step during an extraordinary period in our industry. In our initial quarter as a standalone company, we delivered technology-driven, organic growth in nearly all regions despite continued pressure from the unprecedented weather events that challenged near-term market conditions in North America."

Collins continued, "We remain committed to executing on our priorities and adjusting our actions focused on delivering continuous value for our customers and shareholders. We are delivering on our cost synergy targets, with an additional $200 million realized in the first half, and we continue to demonstrate our commitment to customer-centered innovation through the acceleration of new product launches that are helping to address real-time challenges facing growers around the world."

Summary of Second Quarter 2019

Weather-related planting delays and lower than expected planted area in corn, soybeans, and canola pressured sales in North America, and together with an unfavorable currency impact, drove a decrease in net sales of 3 percent in the second quarter 2019 versus the same period last year. Organic sales1 growth in Latin America was driven by strong early demand for Crop Protection products, while EMEA2 and Asia Pacific organic growth was primarily driven by strong demand for new products, including Isoclast insecticide, Zorvec fungicide and Arylex herbicide.

Local price declined 1 percent in the second quarter 2019 versus the year-ago period, with price gains in Rest of World2 more than offset by decreases in North America due to higher replant in corn and competitive pricing pressure on soybeans. Volumes were essentially flat versus the prior-year period due to 5 percent lower volumes in North America on weather-related impacts, offset by performance across the Rest of the World2 on volume growth of 14 percent led by Latin America on pre-season early demand. Currency represented a headwind of 2 percent compared with the same quarter last year, with impacts driven predominately by the Euro.

GAAP net income from continuing operations totaled $0.5 billion in the second quarter 2019, down 50 percent versus the same quarter last year on a pro forma basis. Operating EBITDA1 for the second quarter 2019 was $1.5 billion, a decrease of 6 percent as compared to the same period last year on a pro forma basis. Improvement in Crop Protection segment operating EBITDA from new products and cost savings from synergies were more than offset by currency impacts, lower Seed results due to competitive pricing pressure in soybeans, higher replant in corn and lower Seed margins.

Summary of First Half 2019

Net sales for the first half 2019 were $9 billion, down 6 percent as compared to the prior-year period.  Volumes were down 3 percent, with gains in Latin America, EMEA and Asia Pacific more than offset by the declines in North America. Price was flat for the period, with price improvements primarily due to strong demand for new products offset by North America. Currency was a headwind of 3 percent compared with the prior-year period.

Pro forma net income from continuing operations totaled $0.6 billion for the first half 2019, down 48 percent versus the same period last year. Pro forma operating EBITDA1 for the first half 2019 was $2 billion, down 13 percent as compared to the prior-year period. Declines in Crop Protection and Seed were primarily due to lower sales from the impact of weather delays and reduced planted area in North America, competitive pricing pressure, lower margins and currency offsetting cost savings from synergies.

The Company reported GAAP EPS from continuing operations of $0.63, with operating EPS1 of $1.42 for the second quarter 2019. Pro forma GAAP EPS for the first half 2019 was $0.77 with pro forma operating EPS1 of $1.75.

($ in millions)

2Q

2019

2Q

2018

%
Change

%
Organic
Change(1)


1H

2019

1H

2018

%
Change

%
Organic
Change(1)

Net Sales

$

5,556


$

5,731


(3)

%

(1)

%


$

8,952


$

9,525


(6)

%

(3)

%

North America

3,785


4,126


(8)

%

(8)

%


5,177


5,897


(12)

%

(12)

%

Rest of World

1,771


1,605


10

%

17

%


3,775


3,628


4

%

12

%

EMEA

667


687


(3)

%

6

%


2,031


2,083


(2)

%

7

%

Latin America

653


487


34

%

39

%


1,018


859


19

%

25

%

Asia Pacific

451


431


5

%

10

%


726


686


6

%

12

%

 

 

($ in millions, except where noted)

2Q

2019

2Q 

2018 (3)

% Change


1H

2019 (3)

1H

2018 (3)

% Change

GAAP Net income from Continuing
Operations

$

483


$

968


(50)

%


$

595


$

1,145


(48)

%

Operating EBITDA (1)

1,452


1,544


(6)

%


1,970


2,273


(13)

%

GAAP EPS from Continuing Operations
($/share)

$

0.63


$

1.29


(51)

%


$

0.77


$

1.50


(49)

%

Operating EPS (1) ($/share)

$

1.42


$

1.56


(9)

%


$

1.75


$

2.22


(21)

%

Outlook

Corteva revised its full year guidance of pro forma operating EBITDA2 to a range of $1.9 billion to $2.05 billion. Net sales for the full year are expected to be down about 3 percent.

Commenting on the Company's outlook, Collins said, "Despite the first-half challenges, we continue to see strength across our global business. Looking ahead to the second-half, we expect ongoing, solid adoption for high-demand products and anticipate continued ramp-up of recent product launches to continue driving high-value sales globally. We remain focused on delivering cost-synergy commitments and expect to see ongoing improvements from productivity actions in the second half. Overall, we remain firm in executing against our plans, capitalizing on the strength of our industry-leading product portfolio and business model in the face of a historic external environment."

Company Updates

  • Share Repurchase Program and Quarterly Dividend: On June 26, 2019, Corteva announced the authorization of a $1 billion share repurchase program and its first common stock dividend. The share repurchase program is expected to be completed in three years. The inaugural quarterly common stock dividend is expected to return ~$400 million to shareholders annually. Collectively, these announcements reinforce the Company's ongoing commitment to return value to shareholders.

  • Enlist E3TM(4) Licensing Update: In the second quarter 2019, Corteva sold more than 150,000 units of Enlist E3TM soybeans in North America and began recognizing licensing income related to the proprietary trait technology for over 100 executed licenses to date. Enlist E3TM soybeans are estimated to be on greater than 10 percent of North American planted soybean acres in 2020.

  • Label Expansion for Transform® WG insecticide: On July 12, Corteva Agriscience announced the fully restored and expanded federal label from the U.S. Environmental Protection Agency for Transform® WG insecticide with Isoclast™ active. Eight new crops, including corn and alfalfa, are on the expanded label, which also restores the previously labeled use for soybeans and cotton - and provides farmers with a distinct mode of action in the management of destructive insects. In the second quarter 2019, Isoclast insecticide sales were approximately $40 million, a more than 70 percent increase from prior year.

Crop Protection Results

Net Sales

($ in millions)

2Q

2019

2Q

2018

%
Change

%
Organic
Change (1)


1H

2019

1H

2018

%
Change

%
Organic
Change (1)

North America

$

686


$

847


(19)

%

(18)

%


$

1,165


$

1,419


(18)

%

(17)

%

Rest of World

1,171


1,020


15

%

21

%


2,121


1,941


9

%

17

%

EMEA

393


420


(6)

%

1

%


953


994


(4)

%

5

%

Latin America

466


316


47

%

52

%


653


481


36

%

43

%

Asia Pacific

312


284


10

%

15

%


515


466


11

%

16

%

Total Crop Protection
Net Sales

$

1,857


$

1,867


(1)

%

3

%


$

3,286


$

3,360


(2)

%

3

%

Crop Protection net sales were $1.9 billion in the second quarter 2019, down 1 percent from the second quarter 2018. A 3 percent increase in volume was more than offset by a 4 percent decline in currency. Rest of World organic growth was 21 percent compared to the prior-year period.

Volume growth in the segment was primarily driven by strong early demand for spinosyns insecticides and seed applied technologies in Latin America, and sales from new products, including ZorvecTM fungicide, IsoclastTM insecticide and ArylexTM herbicide, which increased 73 percent from prior year. This growth was partially offset by the impacts of wet weather in North America, which negatively impacted corn and soybean herbicide and nitrogen stabilizer applications. Unfavorable currency impacts were driven predominately by the Euro.

Crop Protection operating EBITDA was $0.5 billion in the second quarter 2019, up 6 percent from the second quarter 2018 on a pro forma basis. Cost synergies, ongoing cost reductions and sales from new products more than offset the unfavorable impact of currency.

Crop Protection net sales were $3.3 billion for the first six months of 2019, down 2 percent from the prior-year period. The decrease was primarily due to a 5 percent decline from currency, partially offset by a 2 percent increase in local price and a 1 percent increase in volume. Rest of World organic growth was 17 percent compared to the prior-year period.

Unfavorable currency impacts primarily due to the Euro were partially offset by increases in local price. The increase in volume was driven by sales from new product launches, including ZorvecTM fungicide and IsoclastTM insecticide, which increased 56 percent for the first half, and strong early demand for spinosyns insecticides in Latin America, partially offset by the impacts of wet weather in North America.

Crop Protection pro forma operating EBITDA was $0.7 billion for the first six months of 2019, down 10 percent from the first six months of 2018. The unfavorable impact of currency, volume declines in North America and higher input costs more than offset cost synergies and ongoing cost reductions.

Seed Results

Net Sales

($ in millions)

2Q

2019

2Q

2018

%
Change

%
Organic
Change (1)


1H

2019

1H

2018

%
Change

%
Organic
Change (1)

North America

$

3,099


$

3,279


(5)

%

(5)

%


$

4,012


$

4,478


(10)

%

(10)

%

Rest of World

600


585


3

%

10

%


1,654


1,687


(2)

%

7

%

EMEA

274


267


3

%

13

%


1,078


1,089


(1)

%

9

%

Latin America

187


171


9

%

13

%


365


378


(3)

%

2

%

Asia Pacific

139


147


(5)

%

%


211


220


(4)

%

3

%

Total Seed Net Sales

$

3,699


$

3,864


(4)

%

(3)

%


$

5,666


$

6,165


(8)

%

(5)

%

Seed net sales were $3.7 billion in the second quarter 2019, down 4 percent from the second quarter 2018. The decrease was primarily due to a 2 percent decline in local price, a 1 percent decline in currency, and a 1 percent decline in volume. Rest of World organic growth was 10 percent compared to the prior-year period.

The decrease in local price was driven by competitive pressure in soybeans in North America, as well as an increase in corn seed replant in the U.S. Unfavorable currency impacts were due primarily to the Euro. The decline in volume was driven by significant weather-related planting delays and flooding in North America, leading to a reduction in expected planted acres for corn, soybeans, and canola. Volume declines were partially offset by corn sales recovered from the first quarter weather-related delays and a change in the route-to-market in several markets, coupled with increased demand in EMEA for corn and sunflower seed, as well as strong early demand for corn seed in Latin America.

Seed pro forma operating EBITDA was $1.0 billion in the second quarter 2019, a decline of 11 percent compared to the second quarter 2018 on a pro forma basis. Competitive pricing pressure and lower margins more than offset cost synergies in R&D and ongoing cost reductions.

Seed net sales were $5.7 billion for the first six months of 2019, down 8 percent from the first six months of 2018. The decrease was primarily due to a 4 percent decline in volume, a 3 percent decline in currency, and a 1 percent decline in local price. Rest of World organic growth was 7 percent compared to the prior-year period.

The decline in volume was driven by weather-related impacts in North America and the impact of early deliveries of corn seed in the fourth quarter 2018, which were partially offset by favorable corn seed demand in EMEA. Unfavorable currency impacts were driven predominately by the Euro. The decrease in local price was driven by the impact of the North American market.

Seed pro forma operating EBITDA was $1.4 billion for the first six months of 2019, a decline of 15 percent compared to the first six months of 2018 on a pro forma basis. Volume declines in North America, competitive pricing pressure and the unfavorable impact of currency more than offset cost synergies in R&D and ongoing cost reductions.

Second Quarter Conference Call

The Company will host a live webcast of its second quarter earnings conference call with investors to discuss its results and outlook today at 9:00 a.m. ET. The slide presentation that accompanies the conference call will be posted on the Company's Investor Events and Presentations page. A replay of the webcast will also be available on the Investor Events and Presentations page.

About Corteva Agriscience

Corteva Agriscience is a publicly traded, global pure-play agriculture company that provides farmers around the world with the most complete portfolio in the industry - including a balanced and diverse mix of seed, crop protection and digital solutions focused on maximizing productivity to enhance yield and profitability. With some of the most recognized brands in agriculture and an industry-leading product and technology pipeline well positioned to drive growth, the Company is committed to working with stakeholders throughout the food system as it fulfills its promise to enrich the lives of those who produce and those who consume, ensuring progress for generations to come. Corteva Agriscience became an independent public company on June 1, 2019, and was previously the Agriculture Division of DowDuPont. More information can be found at www.corteva.com.

Follow Corteva Agriscience on Facebook, Instagram, LinkedIn, Twitter and YouTube.

Cautionary Statement About Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and may be identified by their use of words like "plans," "expects," "will," "anticipates," "believes," "intends," "projects," "estimates" or other words of similar meaning. All statements that address expectations or projections about the future, including statements about Corteva's strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures, and financial results, as well as expected benefits from, the separation of Corteva from DuPont, are forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond Corteva's control. While the list of factors presented below is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Corteva's business, results of operations and financial condition. Some of the important factors that could cause Corteva's actual results to differ materially from those projected in any such forward-looking statements include: (i) effect of competition and consolidation in Corteva's industry; (ii) failure to successfully develop and commercialize Corteva's pipeline; (iii) failure to obtain or maintain the necessary regulatory approvals for some Corteva's products; (iv) failure to enforce Corteva's intellectual property rights or defend against intellectual property claims asserted by others; (v) effect of competition from manufacturers of generic products; (vi) impact of Corteva's dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (vii) costs of complying with evolving regulatory requirements and the effect of actual or alleged violations of environmental laws or permit requirements; (viii) effect of the degree of public understanding and acceptance or perceived public acceptance of Corteva's biotechnology and other agricultural products; (ix) effect of changes in agricultural and related policies of governments and international organizations; (x) effect of disruptions to Corteva's supply chain, information technology or network systems; (xi) competitor's establishment of an intermediary platform for distribution of Corteva's products; (xii) effect of volatility in Corteva's input costs; (xiii) failure to raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xiv) failure of Corteva's customers to pay their debts to Corteva, including customer financing programs; (xv) failure to realize the anticipated benefits of the internal reorganizations taken by DowDuPont in connection with the spin-off of Corteva; (xvi) failure to benefit from significant cost synergies and risks related to the indemnification obligations of legacy DuPont liabilities in connection with the separation of Corteva; (xvii) increases in pension and other post-employment benefit plan funding obligations; (xviii) effect of compliance with environmental laws and requirements and adverse judgments on litigation; (xix) risks related to Corteva's global operations; (xx) effect of climate change and unpredictable seasonal and weather factors; (xxi) effect of counterfeit products; (xxii) failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions; and (xxiii) risks related to the discontinuation of LIBOR.

Additionally, there may be other risks and uncertainties that Corteva is unable to currently identify or that Corteva does not currently expect to have a material impact on its business.  Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Corteva's management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Corteva disclaims and does not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the "Risk Factors" section of Exhibit 99.1 of Amendment No. 4 to Corteva's Registration Statement on Form 10 and of Corteva's Quarterly Report on Form 10-Q for the period ended March 31, 2019, as modified by subsequent reports on Form 10-Q and Current Reports on Form 8-K.

Corteva Unaudited Pro Forma Financial Information
In order to provide the most meaningful comparison of results of operations, supplemental unaudited pro forma financial information for the first quarter of 2019 and prior has been included in this presentation. This presentation presents the pro forma results of Corteva, after giving effect to events that are (1) directly attributable to the Merger, the divestiture of Historical DuPont's specialty products and materials science businesses, the receipt of Dow AgroSciences, debt retirement transactions related to paying off or retiring portions of E. I. du Pont de Nemours and Company ("Historical DuPont")'s existing debt liabilities, and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva common stock; (2) factually supportable and (3) with respect to the pro forma statements of income, expected to have a continuing impact on the consolidated results. Refer to Amendment No. 4 of Corteva's registration statement on Form 10 filed on May 6, 2019, which can be found on the investors section of the Corteva website, for further details on the above transactions. The pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X, and are presented for informational purposes only, and do not purport to represent what the results of operations would have been had the above actually occurred on the dates indicated, nor do they purport to project the results of operations for any future period or as of any future date.

Non-GAAP Financial Measures
This earnings release includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures include organic sales, operating EBITDA, pro forma operating EBITDA, segment operating EBITDA, pro forma segment operating EBITDA, operating earnings per share, and pro forma operating earnings per share. Management believes that these non-GAAP measures best reflect the ongoing performance of the Company during the periods presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the Company and a more useful comparison of year over year results. These non-GAAP measures supplement the Company's U.S. GAAP disclosures and should not be viewed as an alternative to U.S. GAAP measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for these non-GAAP measures to U.S. GAAP are provided in the Selected Financial Information and Non-GAAP Measures starting on page 13.  These non-GAAP measures are being reconciled to a pro forma GAAP financial measure prepared and presented in accordance with Article 11 of Regulation S-X.  See Article 11 Pro Forma Combined Statements of Operations starting on page 21.

Corteva does not provide forward-looking U.S. GAAP financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most comparable U.S. GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, foreign currency exchange gains or losses and potential future asset impairments, as well as discrete taxable events, without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP results for the guidance period.

Organic sales is defined as price and volume and excludes currency and portfolio impacts. Operating EBITDA is defined as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, non-operating costs, net and foreign exchange gains (losses), excluding the impact of adjusted significant items. Non-operating costs, net consists of non-operating pension and other post-employment benefit (OPEB) costs, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont. Segment Operating EBITDA is defined as Operating EBITDA excluding corporate expenses. Operating earnings and operating earnings per share are defined as "Earnings per common share from continuing operations - diluted" excluding the after-tax impact of significant items, the after-tax impact of non-operating costs, net, and the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont. Although amortization of the Company's intangible assets is excluded from these non-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized.

® TM SM Trademarks and service marks of Dow AgroSciences, DuPont or Pioneer, and their affiliated companies or their respective owners.

 

Corteva, Inc.

Consolidated Statements of Operations

(Dollars in millions, except per share amounts)











Three Months Ended
June 30,


Six Months Ended

June 30,


2019


2018


2019


2018

Net sales

$

5,556



$

5,731



$

8,952



$

9,525


Cost of goods sold

3,047



3,687



5,258



6,439


Research and development expense

269



354



568



685


Selling, general and administrative expenses

937



965



1,672



1,714


Amortization of intangibles

113



107



214



196


Restructuring and asset related charges - net

60



101



121



231


Integration and separation costs

330



249



542



444


Other income - net



128



31



111


Loss on early extinguishment of debt

13





13




Interest expense

34



88



93



169


Income (loss) from continuing operations before income taxes

753



308



502



(242)


Provision for (benefit from) income taxes on continuing operations

270



(67)



203



(179)


Income (loss) from continuing operations after income taxes

483



375



299



(63)


(Loss) Income from discontinued operations after income taxes

(1,077)



323



(717)



674










Net (loss) income

(594)



698



(418)



611










Net income attributable to noncontrolling interests

14



4



26



24










Net (loss) income attributable to Corteva

$

(608)



$

694



$

(444)



$

587










Basic (loss) earnings per share of common stock:








Basic earnings (loss) per share of common stock from continuing operations

$

0.63



$

0.49



$

0.37



$

(0.11)


Basic (loss) earnings per share of common stock from discontinued operations

(1.44)



0.43



(0.96)



0.89


Basic (loss) earnings per share of common stock1

$

(0.81)



$

0.92



$

(0.59)



$

0.78










Diluted (loss) earnings per share of common stock:








Diluted earnings (loss) per share of common stock from continuing operations

$

0.63



$

0.49



$

0.37



$

(0.11)


Diluted (loss) earnings per share of common stock from discontinued operations

(1.44)



0.43



(0.96)



0.89


Diluted (loss) earnings per share of common stock1

$

(0.81)



$

0.92



$

(0.59)



$

0.78










Average number of shares outstanding used in earnings per share (EPS)
calculation2








  Basic

749.4


749.4


749.4


749.4

  Diluted

750.0


749.4


749.7


749.4

1.

The sum of the individual earnings per share amounts from continuing operations and discontinued operations may not equal the total company earnings per share amounts due to rounding.

2.

On June 1, 2019, DuPont de Nemours, Inc. ("DuPont") distributed 748,815,000 shares of Corteva, Inc. common stock to holders of its common stock. Basic and diluted (loss) earnings per common share for the three and six months ended June 30, 2018 were calculated using the shares distributed on June 1, 2019 plus 582,000 of additional shares in which accelerated vesting conditions have been met.

 

 

Corteva, Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)









June 30,

2019


December 31,

2018


June 30,

2018

Assets







Current assets







Cash and cash equivalents


$

2,077



$

2,270



$

2,696


Marketable securities


6



5



49


Accounts and notes receivable, net


7,434



5,260



7,331


Inventories


3,918



5,310



4,362


Other current assets


1,086



1,038



1,181


Assets of discontinued operations




9,089



9,022


Total current assets


14,521



22,972



24,641


Investment in nonconsolidated affiliates


64



138



195


Property, plant and equipment, net of accumulated depreciation

  (June 30, 2019 - $3,207, December 31, 2018 - $2,796 and June 30, 2018

  $2,598)


4,543



4,544



4,463


Goodwill


10,249



10,193



14,612


Other intangible assets


11,832



12,055



12,318


Deferred income taxes


325



304



419


Other assets


2,464



1,932



1,909


Assets of discontinued operations - noncurrent




56,354



57,381


Total Assets


$

43,998



$

108,492



$

115,938









Liabilities and Equity







Current liabilities







Short-term borrowings and capital lease obligations


$

2,058



$

2,154



$

3,715


Accounts payable


3,139



3,798



3,629


Income taxes payable


282



186



249


Accrued and other current liabilities


3,135



4,005



2,689


Liabilities of discontinued operations




3,167



2,767


Total current liabilities


8,614



13,310



13,049


Long-term borrowings and capital lease obligations


117



5,784



9,736


Other Noncurrent Liabilities







Deferred income tax liabilities


1,430



1,480



1,387


Pension and other post employment benefits - noncurrent


5,538



5,677



6,474


Other noncurrent obligations


2,156



1,795



1,960


Liabilities of discontinued operations - noncurrent




5,293



5,629


Total noncurrent liabilities


9,241



20,029



25,186









Commitments and contingent liabilities














Stockholders' equity







Common stock, $0.01 par value; 1,666,666,667 shares authorized;

issued at June 30, 2019, December 31, 2018, and June 30, 2018 - 748,815,000


7






Additional paid-in capital


28,157






Divisional equity




78,020



79,390


Retained earnings


97






Accumulated other comprehensive loss


(2,375)



(3,360)



(2,185)


Total Corteva stockholders' equity


25,886



74,660



77,205


Noncontrolling interests


257



493



498


Total equity


26,143



75,153



77,703


Total Liabilities and Equity


$

43,998



$

108,492



$

115,938


 

 

Corteva, Inc.

Pro Forma Consolidated Statements of Operations1

(Dollars in millions, except per share amounts)



Three Months Ended
June 30,


Six Months Ended

June 30,


2019 2


2018


2019


2018

Net sales

$

5,556



$

5,731



$

8,952



$

9,525


Cost of goods sold

3,047



3,024



5,069



5,155


Research and development expense

269



353



568



684


Selling, general and administrative expenses

937



966



1,675



1,715


Amortization of intangibles

113



107



214



196


Restructuring and asset related charges - net

60



101



121



231


Integration and separation costs

330



126



430



250


Other income - net



128



31



111


Loss on early extinguishment of debt

13





13




Interest expense

34



21



48



38


Income from continuing operations before income taxes

753



1,161



845



1,367


Provision for income taxes on continuing operations

270



193



250



222


Income from continuing operations after income taxes

483



968



595



1,145










Net income from continuing operations attributable to noncontrolling interests

13



5



21



18










Net income from continuing operations attributable to Corteva

$

470



$

963



$

574



$

1,127










Basic earnings per share of common stock from continuing operations

$

0.63



$

1.29



$

0.77



$

1.50










Diluted earnings per share of common stock from continuing operations

$

0.63



$

1.29



$

0.77



$

1.50










Average number of shares outstanding used in earnings per share (EPS)
calculation 3








  Basic

749.4



749.4



749.4



749.4


  Diluted

750.0



749.4



749.7



749.4


1.

See Article 11 Pro Forma Combined Statements of Operations beginning on page 21.

2.

The three months ended June 30, 2019 are on an as reported basis.

3.

On June 1, 2019, DuPont de Nemours, Inc. ("DuPont") distributed 748,815,000 shares of Corteva, Inc. common stock to holders of its common stock. Basic and diluted (loss) earnings per common share for the three and six months ended June 30, 2018 were calculated using the shares distributed on June 1, 2019.

 

 

Corteva, Inc.

Consolidated Segment Information

(Dollars in millions)




Three Months Ended

June 30,


Six Months Ended

June 30,

SEGMENT NET SALES - SEED


2019


2018


2019


2018

    Corn


$

2,309



$

2,248



$

3,777



$

3,945


    Soybean


998



1,214



1,129



1,395


    Other oilseeds


200



194



425



457


    Other


192



208



335



368


Seed


$

3,699



$

3,864



$

5,666



$

6,165













Three Months Ended

June 30,


Six Months Ended

June 30,

SEGMENT NET SALES - CROP PROTECTION


2019


2018


2019


2018

    Herbicides


$

1,044



$

1,068



$

1,815



$

1,931


    Insecticides


459



448



836



777


    Fungicides


302



269



522



547


    Other


52



82



113



105


Crop Protection


$

1,857



$

1,867



$

3,286



$

3,360













Three Months Ended

June 30,


Six Months Ended

June 30,

GEOGRAPHIC NET SALES - SEED


2019


2018


2019


2018

North America 1


$

3,099



$

3,279



$

4,012



$

4,478


EMEA 2


274



267



1,078



1,089


Asia Pacific


139



147



211



220


Latin America


187



171



365



378


Rest of World


600



585



1,654



1,687


Net Sales


$

3,699



$

3,864



$

5,666



$

6,165













Three Months Ended

June 30,


Six Months Ended

June 30,

GEOGRAPHIC NET SALES - CROP PROTECTION


2019


2018


2019


2018

North America 1


$

686



$

847



$

1,165



$

1,419


EMEA 2


393



420



953



994


Asia Pacific


312



284



515



466


Latin America


466



316



653



481


Rest of World


1,171



1,020



2,121



1,941


Net Sales


$

1,857



$

1,867



$

3,286



$

3,360











1. Reflects U.S. & Canada









2. Reflects Europe, Middle East, and Africa









 

 

Corteva, Inc.

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)




Three Months Ended

June 30,


Six Months Ended

June 30,



2019


2018


2019


2018

SEGMENT OPERATING EBITDA


Pro Forma


Pro Forma


Pro Forma


Pro Forma

Seed


$

1,036



$

1,158



$

1,361



$

1,598


Crop Protection


450



423



670



746


Segment Operating EBITDA


$

1,486



$

1,581



$

2,031



$

2,344













Three Months Ended

June 30,


Six Months Ended

June 30,



2019


2018


2019


2018

RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
AFTER INCOME TAXES TO OPERATING EBITDA


As Reported


Pro Forma


Pro Forma


Pro Forma

Pro forma income from continuing operations after income taxes (GAAP)


$

483



$

968



$

595



$

1,145


Provision for income taxes on continuing operations


270



193



250



222


Pro forma income from continuing operations before income taxes (GAAP)


753



1,161



845



1,367


Depreciation and amortization


227



237



485



452


Interest income


(17)



(24)



(33)



(51)


Interest expense


34



21



48



38


Exchange losses - net


32



1



59



66


Non-operating benefits - net1


(32)



(55)



(74)



(106)


Significant items charge


455



203



640



507


Operating EBITDA (Non GAAP)


1,452



1,544



1,970



2,273


Corporate expenses


34



37



61



71


Segment Operating EBITDA (Non GAAP)


$

1,486



$

1,581



$

2,031



$

2,344


1.

Non-operating (benefit) costs—net consists of non-operating pension and other post-employment benefit (OPEB) (benefit) costs, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont.

 

 

Corteva, Inc.

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)


PRICE - VOLUME - CURRENCY ANALYSIS

REGION




Q2 2019 vs. Q2 2018

Percent Change Due To:


Net Sales Growth
(GAAP)

Organic Growth (Non-
GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(341)


(8)

%

$

(323)


(8)

%

(3)

%

(5)

%

%

%

EMEA

(20)


(3)

%

39


6

%

1

%

5

%

(9)

%

%

Asia Pacific

20


5

%

42


10

%

7

%

3

%

(5)

%

%

Latin America

166


34

%

189


39

%

2

%

37

%

(5)

%

%

Rest of World

166


10

%

270


17

%

3

%

14

%

(7)

%

%

Total

$

(175)


(3)

%

$

(53)


(1)

%

(1)

%

%

(2)

%

%










SEED










Q2 2019 vs. Q2 2018

Percent Change Due To:


Net Sales Growth
(GAAP)

Organic Growth (Non-
GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(180)


(5)

%

$

(167)


(5)

%

(2)

%

(3)

%

%

%

EMEA

7


3

%

35


13

%

(1)

%

14

%

(10)

%

%

Asia Pacific

(8)


(5)

%

(1)


%

1

%

(1)

%

(5)

%

%

Latin America

16


9

%

23


13

%

(1)

%

14

%

(4)

%

%

Rest of World

15


3

%

57


10

%

%

10

%

(7)

%

%

Total

$

(165)


(4)

%

$

(110)


(3)

%

(2)

%

(1)

%

(1)

%

%










CROP PROTECTION


Q2 2019 vs. Q2 2018

Percent Change Due To:


Net Sales Growth
(GAAP)

Organic Growth (Non-
GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(161)


(19)

%

$

(156)


(18)

%

(5)

%

(13)

%

%

(1)

%

EMEA

(27)


(6)

%

4


1

%

2

%

(1)

%

(7)

%

%

Asia Pacific

28


10

%

43


15

%

11

%

4

%

(5)

%

%

Latin America

150


47

%

166


52

%

3

%

49

%

(5)

%

%

Rest of World

151


15

%

213


21

%

5

%

16

%

(6)

%

%

Total

$

(10)


(1)

%

$

57


3

%

%

3

%

(4)

%

%

 

 

Corteva, Inc.

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)


PRICE - VOLUME - CURRENCY ANALYSIS

REGION




First Half 2019 vs. First Half  2018

Percent Change Due To:


Net Sales Growth (GAAP)

Organic Growth (Non-GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(720)


(12)

%

$

(690)


(12)

%

(2)

%

(10)

%

%

%

EMEA

(52)


(2)

%

143


7

%

1

%

6

%

(9)

%

%

Asia Pacific

40


6

%

80


12

%

7

%

5

%

(6)

%

%

Latin America

159


19

%

214


25

%

4

%

21

%

(6)

%

%

Rest of World

147


4

%

437


12

%

3

%

9

%

(8)

%

%

Total

$

(573)


(6)

%

$

(253)


(3)

%

%

(3)

%

(3)

%

%










SEED










First Half 2019 vs. First Half  2018

Percent Change Due To:


Net Sales Growth (GAAP)

Organic Growth (Non-GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(466)


(10)

%

$

(450)


(10)

%

(2)

%

(8)

%

%

%

EMEA

(11)


(1)

%

98


9

%

1

%

8

%

(10)

%

%

Asia Pacific

(9)


(4)

%

6


3

%

2

%

1

%

(7)

%

%

Latin America

(13)


(3)

%

8


2

%

%

2

%

(5)

%

%

Rest of World

(33)


(2)

%

112


7

%

1

%

6

%

(9)

%

%

Total

$

(499)


(8)

%

$

(338)


(5)

%

(1)

%

(4)

%

(3)

%

%










CROP PROTECTION


First Half 2019 vs. First Half  2018

Percent Change Due To:


Net Sales Growth (GAAP)

Organic Growth (Non-GAAP)

Local Price &



Portfolio /


$

%

$

%

Product Mix

Volume

Currency

Other

North America

$

(254)


(18)

%

$

(240)


(17)

%

(2)

%

(15)

%

(1)

%

%

EMEA

(41)


(4)

%

45


5

%

1

%

4

%

(9)

%

%

Asia Pacific

49


11

%

74


16

%

9

%

7

%

(5)

%

%

Latin America

172


36

%

206


43

%

6

%

37

%

(7)

%

%

Rest of World

180


9

%

325


17

%

4

%

13

%

(8)

%

%

Total

$

(74)


(2)

%

$

85


3

%

2

%

1

%

(5)

%

%

 

 

Corteva, Inc.

Significant Items

(Dollars in millions, except per share amounts)


SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX)









Three Months Ended

June 30,


Six Months Ended

June 30,


2019


2018


2019


2018


As Reported


Pro Forma


Pro Forma


Pro Forma

Seed

$

(101)



$

(37)



$

(152)



$

(83)


Crop Protection

(2)



24



(25)



12


Corporate

(352)



(190)



(463)



(436)


Total significant items before income taxes

$

(455)



$

(203)



$

(640)



$

(507)










SIGNIFICANT ITEMS - PRE-TAX, AFTER-TAX AND EPS IMPACTS






















Pre-tax


After-tax


($ Per Share)1



2019


2018


2019


2018


2019


2018

1st Quarter

Pro Forma


Pro Forma


Pro Forma


Pro Forma


Pro Forma


Pro Forma

Integration costs 1

$

(100)



$

(124)



$

(16)



$

(93)



$

(0.02)



$

(0.12)


Restructuring and asset related charges, net 2

(61)



(130)



(53)



(100)



(0.07)



(0.13)


Loss on divestiture 3

(24)





(24)





(0.03)




Income tax items 4



(50)





(102)





(0.14)


1st Quarter - Total

$

(185)



$

(304)



$

(93)



$

(295)



$

(0.12)



$

(0.39)















2nd Quarter

Actual


Pro Forma


Actual


Pro Forma


Actual


Pro Forma

Integration and separation costs 1

$

(330)



$

(126)



$

(436)



$

(97)



$

(0.58)



$

(0.13)


Restructuring and asset related charges, net 2

(60)



(101)



(48)



(81)



(0.06)



(0.11)


Gain on sale of assets 5



24





19





0.03


Amortization of inventory step up 6

(52)





(41)





(0.06)




Loss on early extinguishment of debt 7

(13)





(10)





(0.01)




Income tax items







(7)





(0.01)


2nd Quarter - Total

$

(455)



$

(203)



$

(535)



$

(166)



$

(0.71)



$

(0.22)















Year-to-date Total 8

$

(640)



$

(507)



$

(628)



$

(461)



$

(0.84)



$

(0.62)


1.

Integration costs is included in "Integration and separation costs" on Statement of Operations.  Beginning in Q2 2019, this includes both integration and separation costs.

2.

Second quarter and first quarter 2019 included restructuring and asset related charges of $(60) million and $(61) million, respectively.  The charge for the second quarter is related to the DowDuPont Cost Synergy Program.  The charge for the first quarter related primarily to the DowDuPont Cost Synergy Program and the DowDuPont Agriculture Division Restructuring Program.


Second quarter and first quarter 2018 included restructuring and asset related charges of $(101) million and $(130) million, respectively.  The charges in the first half of 2018 related to the DowDuPont Cost Synergy Program.

3.

First quarter 2019 included a loss of $(24) million included in other income - net related to Historical Dow's sale of a joint venture related to synergy actions.

4.

First quarter 2018 includes a $(50) million foreign exchange loss related to adjustments to foreign currency exchange contracts as a result of U.S. tax reform.

5.

Second quarter 2018 includes a gain of $24 million included in other income - net related to an asset sale.

6.

Second quarter 2019 includes amortization of inventory step up of $(52) million included in cost of goods sold related to the amortization of the inventory step-up in connection with the Merger.

7.

Second quarter 2019 includes a loss on the early extinguishment of debt of $(13) million related to the difference between the redemption price and the par value of the Make Whole Notes and Term Loan Facility, partially offset by the write-off of unamortized step-up related to the fair value step-up of EID's debt.

8.

Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.

 

 

Corteva, Inc.

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)


Operating Earnings Per Share









Operating earnings per share is defined as earnings per share from continuing operations – diluted, excluding non-operating benefits - net, amortization of intangibles (existing as of Separation), and significant items.












Three Months Ended

June 30,



2019


20182


2019


20182

Operating Earnings (Non-GAAP)


$


$


EPS (diluted)


EPS (diluted)

Pro forma net income from continuing operations
attributable to Corteva (GAAP)


$

470



$

963



0.63



1.29


Less: Non-operating benefits - net, after tax 1


30



43



0.04



0.06


Less: Amortization of intangibles (existing as of
Separation), after tax


(89)



(86)



(0.12)



(0.11)


Less: Significant items charge, after tax


(535)



(166)



(0.71)



(0.22)


Operating Earnings (Non-GAAP)


$

1,064



$

1,172



$

1.42



$

1.56



















Operating Earnings Per Share









Operating earnings per share is defined as earnings per share from continuing operations – diluted, excluding non-operating benefit - net, amortization of intangibles (existing as of Separation), and significant items.












Six Months Ended

June 30,



20192


20182


20192


20182

Operating Earnings (Non-GAAP)


$


$


EPS (diluted)


EPS (diluted)

Pro forma net income from continuing operations
attributable to Corteva (GAAP)


574



1,127



0.77



1.50


Less: Non-operating benefits - net, after tax 1


61



83



0.08



0.11


Less: Amortization of intangibles (existing as of
Separation), after tax


(170)



(156)



(0.22)



(0.21)


Less: Significant items charge, after tax


(628)



(461)



(0.84)



(0.62)


Operating Earnings (Non-GAAP)


$

1,311



$

1,661



$

1.75



$

2.22



















1.

Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) (benefit) costs, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont.

2.

Periods are presented on a Pro Forma Basis

 

 

Corteva, Inc.

Reconciliation of Non-GAAP Measures

(Dollars in millions)


Reconciliation of Base Income Tax Rate to Effective Income Tax Rate

Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), significant items, amortization of intangibles (existing as of Separation), and non-operating benefits - net.










Three Months Ended

June 30,


Six Months Ended

June 30,


2019


2018


2019


2018


Pro Forma


Pro Forma


Pro Forma


Pro Forma

Income from continuing operations before income taxes (GAAP)

$

753



$

1,161



$

845



$

1,367


Add:   Significant items - charge 1

455



203



640



507


           Non-operating benefits - net

(32)



(55)



(74)



(106)


           Amortization of intangibles (existing as of Separation)

113



107



214



196


Less:    Exchange losses, net

(32)



(1)



(59)



(66)


Income from continuing operations before income taxes, significant items, non-
operating benefits - net, merger-related amortization step up, and exchange
losses (Non-GAAP)

$

1,321



$

1,417



$

1,684



$

2,030










Provision for income taxes on continuing operations (GAAP)

$

270



$

193



$

250



$

222


Add:  Tax (expenses) benefits on significant items charge

(80)



37



12



46


          Tax expenses on non-operating benefits - net

(2)



(12)



(13)



(23)


          Tax benefits on amortization of intangibles (existing as of Separation)

24



21



44



40


          Tax benefits (expenses) on exchange gains/losses

18



(44)



12



14


Operating provision for income taxes on continuing earnings, excluding
exchange losses (Non-GAAP)

$

230



$

195



$

305



$

299










Effective income tax rate (GAAP)

35.9

%


16.6

%


29.6

%


16.2

%

Significant items, non-operating benefits, and amortization of intangibles
(existing as of Separation) effect

(19.4)

%


0.3

%


(11.6)

%


(1.7)

%

Tax rate, from continuing operations before significant items, non-operating
benefits - net, and amortization of intangibles (existing as of Separation)

16.5

%


16.9

%


18.0

%


14.5

%

Exchange gains (losses) effect

0.9

%


(3.1)

%


0.1

%


0.2

%

Operating income tax rate from continuing operations (Non-GAAP)

17.4

%


13.8

%


18.1

%


14.7

%









1.     See Significant Items table for further detail.


 

 

Corteva, Inc.

(Dollars in millions, except per share amounts)


Exchange Gains/Losses









The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in other income - net and the related tax impact is recorded in provision for (benefit from) income taxes on the Consolidated Statements of Operations.












Three Months Ended

June 30,


Six Months Ended

June 30,



2019


2018


2019


2018

Subsidiary Monetary Position Gain (Loss)









Pre-tax exchange gains (losses)


$

17



$

(178)



$

7



$

(62)


Local tax benefits (expenses)


7



(3)



(3)



13


Net after-tax impact from subsidiary exchange gains
(losses)


$

24



$

(181)



$

4



$

(49)











Hedging Program (Loss) Gain









Pre-tax exchange (losses) gains


$

(49)



$

177



$

(66)



$

(4)


Tax benefits (expenses)


11



(41)



15



1


Net after-tax impact from hedging program exchange
losses


$

(38)



$

136



$

(51)



$

(3)











Total Exchange Loss









Pre-tax exchange losses


$

(32)



$

(1)



$

(59)



$

(66)


Tax benefits (expenses)


18



(44)



12



14


Net after-tax exchange losses


$

(14)



$

(45)



$

(47)



$

(52)











As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)."










 

 

Corteva, Inc.

Article 11 Pro Forma Combined Statement of Operations

(Dollars in millions)



Three Months Ended

June 30, 2018


As Reported
Corteva


Adjustments


Pro Forma
Corteva



Merger1


Debt
Retirement2


Separations
Related3


Net sales

$

5,731



$



$



$



$

5,731


Cost of goods sold

3,687



(676)





13



3,024


Research and development expense

354







(1)



353


Selling, general and administrative expenses

965







1



966


Amortization of intangibles

107









107


Restructuring and asset related charges - net

101









101


Integration and separation costs

249







(123)



126


Other income (expense) - net

128









128


Loss on early extinguishment of debt










Interest expense

88





(67)





21


Income (loss) from continuing operations before
income taxes

308



676



67



110



1,161


Provision for (benefit from) income taxes on continuing
operations

(67)



130



15



115



193


Income (loss) from continuing operations after
income taxes

375



546



52



(5)



968












Net income (loss) from continuing operations
attributable to noncontrolling interests

5









5












Net income (loss) from continuing operations
attributable to Corteva

$

370



$

546



$

52



$

(5)



$

963












Basic earnings (loss) per share of common stock
from continuing operations

$

0.49









$

1.29












Diluted earnings (loss) per share of common stock
from continuing operations

$

0.49









$

1.29












Average number of shares outstanding used in
earnings per share (EPS) calculation:










  Basic

749.4








749.4


  Diluted

749.4








749.4


1.

Related to the amortization of Historical DuPont's agriculture business' inventory step-up recognized in connection with the Merger, as the incremental amortization is directly attributable to the Merger and will not have a continuing impact.

2.

Represents a reduction of interest expense of $67 million for the three months ended June 30, 2018 related to the amortization of the fair value adjustment to Historical DuPont's long-term debt.

3.

Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.

 

 

Corteva, Inc.

Article 11 Pro Forma Combined Statement of Operations

(Dollars in millions)













Six Months Ended

June 30, 2019


As Reported
Corteva


Adjustments


Pro Forma
Corteva



Merger1


Debt
Retirement2


Separations
Related3


Net sales

$

8,952



$



$



$



$

8,952


Cost of goods sold

5,258



(205)





16



5,069


Research and development expense

568









568


Selling, general and administrative expenses

1,672







3



1,675


Amortization of intangibles

214









214


Restructuring and asset related charges - net

121









121


Integration and separation costs

542







(112)



430


Other income (expense) - net

31









31


Loss on early extinguishment of debt

13









13


Interest expense

93





(45)





48


Income (loss) from continuing operations before
income taxes

502



205



45



93



845


Provision for (benefit from) income taxes on continuing
operations

203



36



10



1



250


Income (loss) from continuing operations after
income taxes

299



169



35



92



595












Net income (loss) from continuing operations
attributable to noncontrolling interests

21









21












Net income (loss) from continuing operations
attributable to Corteva

$

278



$

169



$

35



$

92



$

574












Basic earnings (loss) per share of common stock
from continuing operations

$

0.37









$

0.77












Diluted earnings (loss) per share of common stock
from continuing operations

$

0.37









$

0.77












Average number of shares outstanding used in
earnings per share (EPS) calculation:










  Basic

749.4









749.4


  Diluted

749.7









749.7


1.

Related to the amortization of Historical DuPont's agriculture business' inventory step-up recognized in connection with the Merger, as the incremental amortization is directly attributable to the Merger and will not have a continuing impact.

2.

Represents a reduction of interest expense of 45 million for the six months ended June 30, 2019 related to the amortization of the fair value adjustment to Historical DuPont's long-term debt.

3.

Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.

 

 

Corteva, Inc.

Article 11 Pro Forma Combined Statement of Operations

(Dollars in millions)













Six Months Ended

June 30, 2018


As Reported
Corteva


Adjustments


Pro Forma
Corteva



Merger1


Debt
Retirement2


Separations
Related3


Net sales

$

9,525



$



$



$



$

9,525


Cost of goods sold

6,439



(1,315)





31



5,155


Research and development expense

685







(1)



684


Selling, general and administrative expenses

1,714







1



1,715


Amortization of intangibles

196









196


Restructuring and asset related charges - net

231









231


Integration and separation costs

444







(194)



250


Other income (expense) - net

111









111


Loss on early extinguishment of debt










Interest expense

169





(131)





38


Income (loss) from continuing operations before
income taxes

(242)



1,315



131



163



1,367


Provision for (benefit from) income taxes on continuing
operations

(179)



240



31



130



222


Income (loss) from continuing operations after
income taxes

(63)



1,075



100



33



1,145












Net income (loss) from continuing operations
attributable to noncontrolling interests

18









18












Net income (loss) from continuing operations
attributable to Corteva

$

(81)



$

1,075



$

100



$

33



$

1,127












Basic earnings (loss) per share of common stock
from continuing operations

$

(0.11)









$

1.50












Diluted earnings (loss) per share of common stock
from continuing operations

$

(0.11)









$

1.50












Average number of shares outstanding used in
earnings per share (EPS) calculation:










  Basic

749.4









749.4


  Diluted

749.4









749.4


1.

Related to the amortization of Historical DuPont's agriculture business' inventory step-up recognized in connection with the Merger, as the incremental amortization is directly attributable to the Merger and will not have a continuing impact.

2.

  Represents a reduction of interest expense of $131 million for the six months ended June 30, 2018 related to the amortization of the fair value adjustment to Historical DuPont's long-term debt.

3.

Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.

 

 

(1) Organic sales, Operating EPS, Pro Forma Operating EPS, Operating EBITDA, Pro Forma Operating EBITDA, Segment Operating EBITDA and Pro Forma Segment Operating EBITDA are non-GAAP measures.  See page 7 for further discussion.

(2) North America is defined as U.S. and Canada. Rest of World is defined as EMEA, Latin America and Asia Pacific.  EMEA is defined as Europe, Middle East and Africa.

(3) 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. See page 7 for further discussion.

(4) Enlist E3™ soybeans are jointly developed by Dow AgroSciences and MS Technologies™

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SOURCE Corteva, Inc.

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