Corteva Reports Second Quarter and First Half 2022 Results, Raises Full-Year Net Sales and Earnings Guidance
Increased dividend ~7% on an annualized basis, effective in the third quarter
Announces restructuring program in connection with strategic portfolio reviews
2Q 2022 Results Overview
|
Income from Cont. |
EPS |
|
GAAP |
|
|
|
vs. 2Q 2021 |
+11 % |
(2) % |
- % |
Organic1 Sales |
Operating EBITDA1 |
Operating EPS1 |
|
NON-GAAP |
|
|
|
vs. 2Q 2021 |
+13 % |
+18 % |
+17 % |
1H 2022 Results Overview
|
Income from Cont. |
EPS |
|
GAAP |
|
|
|
vs. 1H 2021 |
+11 % |
(3) % |
(1) % |
Organic1 Sales |
Operating EBITDA1 |
Operating EPS1 |
|
NON-GAAP |
|
|
|
vs. 1H 2021 |
+14 % |
+17 % |
+19 % |
First Half 2022 Highlights
- First half 2022 net sales rose 11% versus prior year with gains in both segments. Organic1 sales increased 14% in the same period with gains in all regions.
- Seed net sales grew 3% and organic1 sales increased 6% year over year, with notable gains in EMEA2, partially offset by the reduction of corn acres and canola volumes in
North America 2. Price was up 7% globally, led by continued execution on the company's price for value strategy and recovery of higher input costs. - Crop Protection net sales grew 24% and organic1 sales increased 28%, led by
North America 2 andLatin America . Volume gains were driven by continued penetration of new products, including EnlistTM and ArylexTM herbicides and OnmiraTM fungicide, and strong early demand inLatin America . Price gains reflected strong execution across all regions in response to cost inflation. - GAAP income and earnings per share (EPS) from continuing operations were
$1.58 billion and$2.16 per share for the first half of 2022, respectively. Operating EBITDA1 was$2.76 billion , a 17% improvement over prior year on strong price execution and volume gains in all regions and productivity actions, partially offset by inflation and currency headwinds. Operating EPS1 was$2.61 per share, up 19% compared to prior year. - Management increased full year 2022 net sales and earnings guidance3. Net sales is expected to be in the range of
$17.2 billion to$17.5 billion and Operating EBITDA1 is expected to be in the range of$2.95 billion to$3.10 billion . Operating EPS1 is expected to be in the range of$2.45 to$2.60 per share. - The Company announced a ~7% annualized dividend increase effective in the third quarter – reflecting continued focus on returning capital to shareholders.
"
"We also continue to take actions to accelerate performance, including the completion of strategic portfolio reviews aimed at refining our strategy, driving operational execution, and making disciplined investment decisions in innovation and technology to deliver increased value to farmers and contribute to a more sustainable global food system.
"We believe that we are well-positioned to continue to adapt and execute in a challenging operating environment. Our strong first half momentum and robust market fundamentals have given us confidence to raise our guidance for the year," said
1. Organic Sales, Operating EPS and Operating EBITDA are non-GAAP measures. See page A-5 for further discussion. 2. |
Company Updates
- Company Announces Completion of Strategic Portfolio Reviews
- In connection with its previously announced business realignment, the Company completed strategic portfolio reviews, aimed at refining the Company's strategy and accelerating short-term and long-term margin growth.
- The outcome of this analysis is the Company's plan to exit non-strategic geographies and product lines while emphasizing its core markets and crops, representing over 95% of its current total net sales and 99% of its current total Operating EBITDA1.
- These portfolio decisions will position the Company to focus investment on delivering greater value to growers through more differentiated and sustainably advantaged solutions, leveraging its pipeline to drive advancements in global food security and climate change.
- The Company is also right-sizing and optimizing its cost structure to enable greater agility and accountability for the performance of its two business units, Seed and Crop Protection.
- As a result, the Company expects to record total restructuring and other charges of approximately
$400 million through the second quarter of 2023, roughly half of which represents cash payments. - In the second quarter of 2022, the Company recorded
$68 million of restructuring and other charges, of which$45 million related to the Company's previously announced exit fromRussia . - As a result of these actions, the Company expects to achieve more than
$200 million in run-rate savings by 2025. - Additional information on the outcome of the strategic portfolio reviews will be shared on
September 13 th at the Company's 2022 Investor Day. - EnlistTM System Accelerates Market Penetration for 2022
- The Company delivered approximately
$980 million in sales for the EnlistTM system during the first half, an increase of more than 60% versus the first half of 2021. - The Company raised its Enlist E3TM4 2022 market penetration outlook to greater than 45% of
U.S. soybean acres, up from greater than 40% expected previously. - The Company estimates that greater than 80% of Enlist E3TM4 acres will receive an EnlistTM herbicide application, reflecting strong market demand and positive grower feedback on the ease and simplicity of the system.
2022 Updated Guidance
The outlook for agriculture remains robust despite recent commodity price volatility. The Company expects record demand for grain and oilseeds in 2022, which should support commodity prices as ending stocks remain under pressure. Grower balance sheets and income levels remain healthy despite increased input costs for fuel and fertilizer, leading customers to prioritize technology to maximize return.
As a result, the Company updated its previously provided guidance3 for the full year 2022 – increasing sales and earnings expectations for this period.
Click here to download the full press release, including segment detail and reconciliations of non-GAAP and GAAP measures, or visit the Corteva Investor Relations website.
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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
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.
® TM Corteva Agriscience and its affiliated companies.
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Media Contact: Gregg Schmidt, +1 302-485-3260, gregg.m.schmidt@corteva.com or Investor Contact: Kim Booth, +1 302-485-3704, kimberly.a.booth@corteva.com