Corteva Reports First Quarter 2024 Results, Reaffirms 2024 Guidance
- 1Q results in line with expectations and mostly constructive ag economy
- Strength of Seed performance demonstrates global demand for top technology
- Crop Protection declines reflect just-in-time purchases and residual inventory imbalances
- FY guidance unchanged, 2024 outlook supported by controllable levers
1Q 2024 Results Overview |
|||
Net Sales |
Income from Cont. Ops (After Tax) |
EPS |
|
GAAP |
|
|
|
vs. 1Q 2023 |
(8) % |
(38) % |
(37) % |
Organic1 Sales |
Operating EBITDA1 |
Operating EPS1 |
|
NON-GAAP |
|
|
|
vs. 1Q 2023 |
(6) % |
(16) % |
(23) % |
"
On Crop Protection, as anticipated, we faced headwinds as the industry continues to work through residual inventory imbalances in key regions and farmers are shifting to just-in-time purchasing. We are expecting growth in the second half of 2024 driven by our differentiated portfolio, leading biologicals products and cost actions.
As a result, we are reaffirming full year 2024 guidance as well as reiterating our confidence in the previously-announced 2025 financial framework."
Chuck Magro
Chief Executive Officer
First Quarter 2024 Highlights
- First quarter 2024 net sales decreased 8% versus prior year. Organic1 sales decreased 6% in the same period.
- Seed net sales grew 2% and organic1 sales increased 5%. Price was up 6% globally, led by continued execution on the Company's price for value strategy and favorable product mix. Volume growth in
North America from higher corn deliveries was offset by delayed demand in EMEA2 due to unfavorable weather. - Crop Protection net sales decreased 20% and organic1 sales declined 21%, on expected industry headwinds globally. Volume declines were against a strong prior year comparison and primarily due to farmer purchases closer to application window, as well as weather and destocking impacts in EMEA2. Price was down 3% due to a competitive environment in most regions.
- GAAP income and earnings per share (EPS) from continuing operations were
$376 million and$0.53 per share for the first quarter 2024, respectively. - Operating EBITDA1 and Operating EPS1 were
$1.03 billion and$0.89 per share for the first quarter 2024, respectively. - The Company reaffirmed full-year 2024 guidance3 and expects net sales in the range of
$17.4 billion to$17.7 billion . Operating EBITDA1 is expected to be in the range of$3.5 billion to$3.7 billion . Operating EPS1 is expected to be in the range of$2.70 to$2.90 per share. Cash provided by operating activities – continuing operations is expected to be in the range of$2.1 billion to$2.6 billion . Free Cash Flow1 is expected to be in the range of$1.5 billion to$2.0 billion . The Company plans to repurchase approximately$1.0 billion shares in 2024.
1Q |
1Q |
% |
% |
|
($ in millions, except where noted) |
2024 |
2023 |
Change |
Organic1 Change |
|
|
|
(8) % |
(6) % |
North America |
|
|
(5) % |
(5) % |
EMEA |
|
|
(12) % |
(6) % |
|
|
|
(7) % |
(15) % |
Asia Pacific |
|
|
(5) % |
(2) % |
1. Organic Sales, Operating EPS, Operating EBITDA, and Free Cash Flow are non-GAAP measures. See page 5 for further discussion. 2. |
Seed Summary
Seed net sales were $2.8 billion in the first quarter of 2024, up from $2.7 billion in the first quarter of 2023. The sales increase was driven by a 6% increase in price, partially offset by a 2% unfavorable currency impact, and a 1% decline in both volume and portfolio.
Price gains were driven by strong execution globally, led by EMEA2, as farmers prioritize the use of top technology to drive higher yields. Volume gains in
Segment operating EBITDA was $748 million in the first quarter of 2024, up 15% from the first quarter of 2023. Price execution, improvement in net royalty expense, and ongoing cost and productivity actions more than offset higher commodity and production costs, and the unfavorable impact of currency. Segment operating EBITDA margin improved by approximately 300 basis points versus the prior-year period.
1Q |
1Q |
% |
% |
|
($ in millions, except where noted) |
2024 |
2023 |
Change |
Organic1 Change |
North America |
|
|
11 % |
11 % |
EMEA |
|
|
(9) % |
- |
Latin America |
|
|
5 % |
(1) % |
Asia Pacific |
|
|
(10) % |
(5) % |
Total Seed Net Sales |
|
|
2 % |
5 % |
Seed Operating EBITDA |
|
|
15 % |
N/A |
Crop Protection Summary
Crop Protection net sales were approximately
The decrease in volume against a strong prior year comparison was primarily due to farmer purchases closer to the application window, as well as weather and destocking impacts in EMEA2. Price declines in
Segment operating EBITDA was
1Q |
1Q |
% |
% |
|
($ in millions, except where noted) |
2024 |
2023 |
Change |
Organic1 Change |
North America |
|
|
(30) % |
(30) % |
EMEA |
|
|
(16) % |
(13) % |
Latin America |
|
|
(17) % |
(27) % |
Asia Pacific |
|
|
(2) % |
- |
Total Crop Protection Net Sales |
|
|
(20) % |
(21) % |
Crop Protection Operating EBITDA |
|
|
(49) % |
N/A |
2024 Guidance
The global outlook for agriculture is stable with mostly constructive fundamentals in 2024. There was record-setting demand for grain, oilseeds, feed, and biofuels in 2023, and we expect that to grow in 2024. On-farm demand for inputs remains healthy and farmers continue to prioritize the need for top-tier technology, despite the normalization of commodity prices. The global Crop Protection market remains imbalanced after the significant destocking in 2023, however we expect to see market growth in the second half of 2024.
The Company is not able to reconcile its forward-looking non-GAAP financial measures, except for Free Cash Flow, to its most comparable
First Quarter Conference Call
The Company will host a live webcast of its first quarter 2024 earnings conference call with investors to discuss its results and outlook tomorrow,
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Cautionary Statement About Forward-Looking Statements
This report contains certain estimates and 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," "outlook," or other words of similar meaning. All statements that address expectations or projections about the future, including statements about
Forward-looking statements and other estimates are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements and other estimates also involve risks and uncertainties, many of which are beyond
Additionally, there may be other risks and uncertainties that
Regulation G (Non-GAAP Financial Measures)
This earnings release includes information that does not conform to
Organic sales is defined as price and volume and excludes currency and portfolio and other impacts, including significant items. Operating EBITDA is defined as earnings (loss) (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits (costs), foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Non-operating benefits (costs) consists of non-operating pension and other post- employment benefit (OPEB) credits (costs), tax indemnification adjustments, and environmental remediation and legal costs associated with legacy businesses and sites. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between
Operating earnings (loss) per share is defined as "earnings (loss) per common share from continuing operations - diluted" excluding the after-tax impact of significant items, the after-tax impact of non-operating benefits (costs), the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont, and the after-tax impact of net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. 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. Any future acquisitions may result in amortization of additional intangible assets. Net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) from changes in fair value of certain undesignated foreign currency derivative contracts. Upon settlement, which is within the same calendar year of execution of the contract, the realized gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in the relevant non-GAAP financial measures, allowing quarterly results to reflect the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair value volatility. Base income tax rate is defined as the effective tax rate excluding the impacts of foreign exchange gains (losses), non-operating benefits (costs), amortization of intangibles (existing as of the Separation), mark- to- market gains (losses) on certain foreign currency contracts not designated as hedges, and significant items.
The Company also uses Free Cash Flow as a non-GAAP measure to evaluate and discuss its liquidity position and ability to generate cash. Free Cash Flow is defined as cash provided by (used for) operating activities – continuing operations, less capital expenditures. We believe that Free Cash Flow provides investors with meaningful information regarding the Company's ongoing ability to generate cash through core operations, and our ability to service our indebtedness, pay dividends (when declared), make share repurchases, and meet our ongoing cash needs for our operations.
® TM Corteva Agriscience and its affiliated companies.
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SOURCE
Media Contact, Bethany Shively, +1 202-997-9438, bethany.shively@corteva.com; Investor Contact, Kim Booth, +1 302-485-3190, kimberly.a.booth@corteva.com