Corteva Reports Fourth Quarter and Full-Year 2023 Results, Provides 2024 Guidance
- Full-year net sales and earnings demonstrates solid execution and strength of portfolio
- 2024 guidance3 reflects continued operating EBITDA1 and margin growth
4Q 2023 Results Overview |
|||
Net Sales |
Loss from Cont. Ops (After Tax) |
EPS |
|
GAAP |
|
|
|
vs. 4Q 2022 |
(3) % |
(463) % |
(450) % |
Organic1 Sales |
Operating EBITDA1 |
Operating EPS1 |
|
NON-GAAP |
|
|
|
vs. 4Q 2022 |
(8) % |
+4 % |
(6) % |
FY 2023 Results Overview |
|||
Net Sales |
Income from Cont. Ops (After Tax) |
EPS |
|
GAAP |
|
|
|
vs. FY 2022 |
(1) % |
(23) % |
(22) % |
Organic1 Sales |
Operating EBITDA1 |
Operating EPS1 |
|
NON-GAAP |
|
|
|
vs. FY 2022 |
(3) % |
+5 % |
+1 % |
Full-Year 2023 Highlights
- Full-year 2023 net sales declined 1% and organic1 sales decreased 3% versus prior year with gains in
North America 2 and EMEA2 offset by declines inLatin America andAsia Pacific . - Seed net sales grew 5% and organic1 sales increased 7%. Price was up 13% globally, led by continued execution on the Company's price for value strategy and demand for new technology. Volume declines were driven by lower corn volumes in
Latin America , the exit fromRussia , and lower corn planted area in EMEA2, partially offset by increased corn acres inNorth America 2. - Crop Protection net sales declined 9% and organic1 sales decreased 12%. Volume declines, largely in
Latin America andNorth America 2, were driven by strategic product exits, inventory destocking, and delayed farmer purchases. Price gains reflected pricing for value and strong execution in response to cost inflation led by EMEA2. - GAAP income and earnings per share (EPS) from continuing operations were
$941 million and$1.30 per share, down 23% and 22%, respectively, compared to prior year. - Operating EBITDA1 was
$3.38 billion , a 5% improvement over prior. Operating EPS1 was$2.69 per share, up 1% compared to prior year. - Cash provided by operating activities – continuing operations was
$1.8 billion , up 98% compared to prior year. Free cash flow1,4 was$1.2 billion . - The Company provided full-year 2024 guidance3 and expects net sales to be in the range of
$17.4 billion to$17.7 billion and Operating EBITDA1 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 flow1,4 is expected to be in the range of$1.5 billion to$2.0 billion .
"
"At Corteva, we see 2024 as another year of strong demand for our differentiated products and a continued focus on controlling the controllables, delivering advanced technology to our customers and generating consistent, incremental value for our shareholders. We have adjusted the 2025 financial framework based on 2023 results and the expectation for continued earnings growth and margin expansion in 2024 and 2025," said
Summary of Fourth Quarter 2023
For the fourth quarter ended December 31, 2023, net sales decreased 3% versus the same period last year. Organic1 sales declined 8%.
Volume declined 9% versus the prior-year period, primarily in
Price increased 1% versus prior year, reflecting broad-based pricing execution in Seed and the continued execution on the Company's price for value strategy, while managing challenging market dynamics in Crop Protection.
GAAP income from continuing operations after income taxes was a loss of $231 million in fourth quarter 2023 compared to a loss of
4Q |
4Q |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
Net Sales |
|
|
(3) % |
(8) % |
North America |
|
|
2 % |
1 % |
EMEA |
|
|
2 % |
3 % |
Latin America |
|
|
(9) % |
(21) % |
Asia Pacific |
|
|
2 % |
5 % |
FY |
FY |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
Net Sales |
|
|
(1) % |
(3) % |
North America |
|
|
4 % |
4 % |
EMEA |
|
|
3 % |
8 % |
Latin America |
|
|
(12) % |
(23) % |
Asia Pacific |
|
|
(7) % |
(2) % |
Seed Summary
Seed net sales were
Lower volumes were driven by lower expected Safrinha planted area and delayed farmer purchases due to unfavorable weather in
Segment operating EBITDA was
4Q |
4Q |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
North America |
|
|
6 % |
6 % |
EMEA |
|
|
8 % |
17 % |
Latin America |
|
|
(7) % |
(12) % |
Asia Pacific |
|
|
(4) % |
(3) % |
Total 4Q Seed |
|
|
(1) % |
(3) % |
4Q Seed Operating EBITDA |
|
|
104 % |
N/A |
Seed net sales were
The increase in price was broad-based and driven by strong demand for top technology and operational execution globally, with global corn and soybean prices up 14% and 7%, respectively. Pricing actions more than offset currency impacts in EMEA. The decline in volume was driven by the 2022 decision to exit Russia, lower corn planted area in EMEA, reduced summer corn planted area and lower expected Safrinha corn planted area in Brazil, partially offset by increased corn acres in
Segment operating EBITDA was $2.1 billion, up 28% from the same period last year. Price execution, reduction of net royalty expense, and ongoing cost and productivity actions more than offset higher commodity and input costs, lower volumes, and the unfavorable impact of currency. Segment operating EBITDA margin improved by approximately 390 basis points versus the prior-year period.
FY |
FY |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
North America |
|
|
11 % |
12 % |
EMEA |
|
|
1 % |
7 % |
Latin America |
|
|
(7) % |
(11) % |
Asia Pacific |
|
|
3 % |
10 % |
Total FY Seed Net Sales |
|
|
5 % |
7 % |
FY Seed |
|
|
28 % |
N/A |
Crop Protection Summary
Crop Protection net sales were approximately $2.1 billion in the fourth quarter of 2023 compared to approximately $2.2 billion in the fourth quarter of 2022. The sales decline was driven by an 8% decrease in volume and a 4% decrease in price, partially offset by a 6% favorable impact from portfolio.
The decrease in volume was driven by strategic product exits and channel inventory destocking, primarily in
Segment operating EBITDA was $267 million in the fourth quarter of 2023, down 20% from the fourth quarter of 2022. Price and volume declines more than offset lower input costs, productivity actions, and the favorable impact from the Biologicals acquisitions. Segment operating EBITDA margin declined by 235 basis points versus the prior-year period.
4Q |
4Q |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
North America |
|
|
(1) % |
(2) % |
EMEA |
|
|
(3) % |
(9) % |
Latin America |
|
|
(12) % |
(30) % |
Asia Pacific |
|
|
5 % |
8 % |
Total 4Q Crop Protection |
|
|
(5) % |
(12) % |
4Q Crop Protection |
|
|
(20) % |
N/A |
Crop Protection net sales were approximately $7.8 billion in 2023 compared to approximately $8.5 billion in 2022. The sales decrease was driven by a 14% decrease in volume and a 1% unfavorable impact from currency. These declines were partially offset by a 4% favorable impact from portfolio and a 2% increase in price.
The decrease in volume was driven by strategic product exits, channel inventory destocking, and delayed farmer purchases. The increase in price was led by EMEA, and mostly reflected pricing for the value of our differentiated technology, including new products, and currency in EMEA, partially offset by challenging market dynamics in
Segment operating EBITDA was
FY |
FY |
% |
% |
|
($ in millions, except where noted) |
2023 |
2022 |
Change |
Organic1 Change |
North America |
|
|
(9) % |
(10) % |
EMEA |
|
|
6 % |
8 % |
Latin America |
|
|
(16) % |
(30) % |
Asia Pacific |
|
|
(11) % |
(6) % |
FY Crop Protection |
|
|
(9) % |
(12) % |
FY Crop Protection |
|
|
(18) % |
N/A |
2024 Guidance
The global outlook for agriculture remains constructive overall in 2024. There was record-setting demand for grain, oilseeds, and biofuels in 2023 and we expect that to continue to grow in 2024. On-farm demand remains steady and overall strong. The Crop Protection industry is working to rebalance after the significant destocking in 2023, however we expect the industry to modestly improve as the imbalance between product going into the channel and on-farm consumption returns to alignment.
The Company provided guidance3 for the full-year 2024.
The Company is not able to reconcile its forward-looking non-GAAP financial measures to its most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of its control, such as Significant Items, without unreasonable effort.
Fourth Quarter Conference Call
The Company will host a live webcast of its fourth quarter 2023 earnings conference call with investors to discuss its results and outlook tomorrow, February 1, 2024, at 9:00 a.m. ET. The slide presentation that accompanies the conference call is 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.
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. The company made the decision, which was retrospectively applied, to adjust the presentation of the Consolidated Statement of Cash Flows to separately show the cash provided by (used for) operating activities – discontinued operations, which was previously presented within cash provided by (used for) operating activities. As a result, the definition for Free Cash Flow was revised to utilize cash provided by (used for) operating activities – continuing operations. The change in definition did not have a material impact to prior years' Free Cash Flow. We made this decision to better present the liquidity generated from our ongoing business operations. Under the revised definition, Free Cash Flow was
® TM Corteva Agriscience and its affiliated companies.
1. Organic Sales, Operating EPS, Operating EBITDA and Free Cash Flow are non-GAAP measures. See page A-5 for further discussion. 2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and
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SOURCE
Media Contact: Bethany Shively, +1 202-997-9438, bethany.shively@corteva.com; Investor Contact: Kim Booth, +1 302-485-3704, kimberly.a.booth@corteva.com