UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 3, 2021
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||||||||
| of Incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices)(Zip Code)
(302 ) 485-3000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition
On November 3, 2021, Corteva, Inc. (the "Company") announced its consolidated financial results for the quarter ended September 30, 2021. A copy of the Company’s press release and financial statement schedules are furnished herewith on Form 8-K as Exhibits 99.1 and 99.2, respectively. The information contained in this report, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. In addition, the information contained in this report shall not be deemed to be incorporated by reference into any registration statement or other document filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Press Release dated November 3, 2021 | |||||
| Financial Statement Schedules dated November 3, 2021 | |||||
| 104 | The cover page from the Company’s Current Report on Form 8-K, formatted in Inline XBRL | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CORTEVA, INC. | |||||
| (Registrant) | |||||
| /s/ Brian Titus | |||||
| Brian Titus | |||||
| Vice President and Controller | |||||
November 3, 2021
1 Corteva Reports Third Quarter and Year-to-Date 2021 Results, Affirms Full-Year Guidance WILMINGTON, Del., November 3, 2021 – Corteva, Inc. (NYSE: CTVA) (“Corteva” or the “Company”) today reported financial results for the third quarter and nine months ended September 30, 2021. 3Q 2021 Results Overview Net Sales Income from Cont. Ops (After Tax) EPS GAAP $2.4B $36M $0.05 vs. 3Q 2020 +27% +109% +110% Organic1 Sales Operating EBITDA1 Operating EPS1 NON-GAAP $2.3B $(51)M $(0.14) vs. 3Q 2020 +24% +72% +64% Third Quarter 2021 Highlights • Net Sales for the third quarter 2021 increased 27% versus prior year, led by Latin America and North America2. Organic1 sales rose 24% in the same period, with volume and price gains on continued penetration of new technology and strong execution globally. • Crop Protection net sales grew 22% and organic1 sales increased 19% for the third quarter. All regions delivered sales gains during the quarter in the segment. Sales of new products drove volume improvement, led by IsoclastTM insecticide. Price gains reflected strong execution. • Seed net sales increased 41% and organic1 sales grew 37% compared to the year-ago period. Volume increases were broad-based, led by North America. Price was up 19% globally, driven by continued strength in Latin America and fewer corn replant units in North America. • GAAP income and earnings per share (EPS) from continuing operations were $36 million and $0.05 per share for the third quarter 2021, respectively. • Volume gains and strong price execution in both segments drove Operating EBITDA1 improvement of 72%, as compared to the same period last year. • The Company’s continued productivity progress in the third quarter partially offset the impact of ongoing raw material cost inflation and other market-driven headwinds. • The Company affirmed previously provided Operating EBITDA1 guidance3 in the range of $2.5 billion and $2.6 billion. Corteva increased its net sales guidance to be in the range of $15.5 billion and $15.7 billion and increased Operating EPS1 guidance to be in the range of $2.05 and $2.15 per share. 1. Organic Sales, Operating EPS and Operating EBITDA are non-GAAP measures. See page A-6 for further discussion. 2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa. 3. The Company does not provide the most comparable GAAP measure on a forward-looking basis. See page 6 for further discussion. 4. Enlist E3™ soybeans are jointly developed by Corteva Agriscience LLC and MS Technologies™ 5. Launches pending all applicable regulatory reviews and approvals. 6. Shares of the Company’s common stock may be repurchased periodically in open-market or private transactions. The actual timing, number and value of shares repurchased under the Company’s authorized share repurchase program will be determined by management at its discretion and will depend on a variety of factors including the market price of Corteva common stock, general market and economic conditions, applicable legal requirements and other business considerations. YTD 2021 Results Overview Net Sales Income from Cont. Ops (After Tax) EPS GAAP $12.2B $1.7B $2.23 vs. YTD 2020 +11% +154% +162% Organic1 Sales Operating EBITDA1 Operating EPS1 NON-GAAP $12.0B $2.31B $2.06 vs. YTD 2020 +9% +25% +41% News Release 3Q 2021
News Release 3Q 2021 2 Company Update Enlist™ Weed Control System Further Bolstered by Conkesta E3™4 Approval • Launched Enlist E3™4 soybeans in Brazil, Uruguay and Argentina and launched Conkesta E3™4 in Brazil – initiated customer trials in the region, with technology expected to strengthen Latin America soybeans position • Anticipate strong product performance for Enlist E3™4 soybeans in the U.S. markets for the 2021 season based on initial reports, with higher expected demand going into 2022 • Expect Enlist™ weed control system to deliver greater than $800 million in revenue for the full year 2021 – on track to nearly double 2020 performance Continued Ramp-up of New Crop Protection Products Reinforces Portfolio Strength • Delivered sales increases on new Crop Protection products – up $335 million versus 2020 YTD, reflecting increases in all regions and indications • Continued to drive progress on new Crop Protection launches5, with first registration of Adavelt™ fungicide achieved ahead of expectations • Strengthened position in high-value sectors, such as nutrient management and biologicals – expect 17 biological technologies to launch5 in 2021 and 2022, spanning every region Pricing, Productivity and Supply Chain Execution Enable Margin Expansion • Actively managing market-driven cost headwinds on key raw materials through strong price execution and productivity actions to deliver margin improvement • Multi-industry freight and logistics challenges resulted in increased lead times and costs, as demand remained elevated and services remain contracted • Mitigating impact of sustained external-driven supply challenges and maximizing operational agility via flexible sourcing strategy in Crop Protection, together with integrated global Seed production network Reinforcing Commitment to Deliver Shareholder Value • Reaffirmed mid-term targets on early 2022 expectations for continued technology ramp-up and geographic advantages, reflecting market strength and Corteva execution • Returned approximately $1 billion to shareholders during the first three quarters via dividends and share repurchases • Company now expects to deliver at least $1.3 billion to shareholders for the full year, including at least $900 million in share repurchases6 Chuck Magro Appointed Chief Executive Officer Proven leader with extensive global agriculture experience Chuck Magro was appointed the Company’s new Chief Executive Officer, effective November 1, 2021. He also joins Corteva’s Board of Directors. Mr. Magro most recently served as Chief Executive Officer of Nutrien. His background includes extensive experience leading diversified global agriculture companies and includes a proven track record of delivering solid profitable growth for shareholders through competitively advantaged and market-driven technology portfolios. Mr. Magro succeeds James C. Collins Jr., who will work with Mr. Magro to assure a smooth transition.
News Release 3Q 2021 3 Summary of Year-to-Date 2021 For the nine months ending September 30, 2021, net sales increased 11% versus the same period last year. Organic1 sales rose 9%. Sales increased in all regions on a reported and organic1 basis, with double-digit organic1 gains in Latin America. Volume grew 6% versus the prior-year period, with gains in both segments led by ongoing penetration of new technology. Sales of new and differentiated Crop Protection products drove double-digit net sales gains for the segment, with an organic1 sales increase of 13%. Seed net sales rose 8% for the year-to-date period, primarily driven by increased North America2 planted area and share gains in the Brazil Safrinha season. Price increased 3% versus prior year, with gains in both segments and all regions. Higher prices reflect ongoing execution on a price-for-value strategy globally and pricing for higher raw material and logistical costs. GAAP income from continuing operations after income taxes was $1.7 billion year-to-date in 2021. Operating EBITDA1 for the period was $2.31 billion, up 25% compared to prior year. 3Q 3Q % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change Net Sales $2,371 $1,863 27% 24% North America $590 $487 21% 20% EMEA $390 $315 24% 19% Latin America $1,097 $805 36% 31% Asia Pacific $294 $256 15% 16% YTD YTD % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change Net Sales $12,176 $11,010 11% 9% North America $6,175 $5,818 6% 5% EMEA $2,702 $2,425 11% 7% Latin America $2,203 $1,754 26% 27% Asia Pacific $1,096 $1,013 8% 7%
News Release 3Q 2021 4 Crop Protection Summary Crop Protection net sales were approximately $1.6 billion in the third quarter of 2021 compared to approximately $1.3 billion in the third quarter of 2020. The sales increase was driven by a 16% increase in volume, a 3% increase in price and a 3% favorable impact from currency. Volume growth was driven by continued penetration of new products, including IsoclastTM insecticide and ArylexTM herbicide, coupled with strong customer demand and an accelerated start to the season in Latin America, which shifted an estimated $100 million in sales from the fourth quarter. Gains were partially offset by an approximate $70 million impact from the decision to phase out select low- margin products. The increase in price was driven by gains in Latin America. Favorable currency impacts were primarily from the Brazilian Real. Segment Operating EBITDA was $206 million in the third quarter of 2021, up 58% from the third quarter of 2020. Volume gains from new products, favorable mix, productivity actions, and continued pricing execution more than offset higher costs, including raw materials and SG&A. 3Q 3Q % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change North America $422 $390 8% 8% EMEA $237 $198 20% 17% Latin America $763 $559 36% 31% Asia Pacific $211 $193 9% 10% Total 3Q Crop Protection Net Sales $1,633 $1,340 22% 19% Crop Protection net sales were approximately $5.2 billion for the first nine months of 2021 compared to approximately $4.5 billion in the first nine months of 2020. The increase was due to a 9% increase in volume, a 4% increase in price and a 3% favorable impact from currency, partially offset by a 1% unfavorable portfolio impact. Volume growth was led by continued penetration of new products, including ArylexTM herbicide and IsoclastTM insecticide. These volume gains were partially offset by an approximate $200 million impact from our decision to phase out select low-margin products. The increase in price was largely driven by gains in Latin America and North America, including pricing for higher raw material and logistical costs. Favorable currency impacts were primarily from the Euro. The portfolio impact was driven by prior-year divestitures in Asia Pacific. Segment Operating EBITDA was $897 million for the first nine months of 2021, up 32% from the first nine months of 2020. Continued penetration of new products, favorable mix, ongoing cost and productivity actions, and a favorable impact from currency more than offset higher input costs, including raw material and logistics costs. Segment Operating EBITDA margin improved by more than 230 basis points versus the prior-year period. YTD YTD % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change North America $1,693 $1,528 11% 10% EMEA $1,304 $1,163 12% 6% Latin America $1,361 $1,086 25% 25% Asia Pacific $808 $717 13% 11% Total YTD Crop Protection Net Sales $5,166 $4,494 15% 13%
News Release 3Q 2021 5 Seed Summary Seed net sales were $738 million in the third quarter of 2021, up from $523 million in the third quarter of 2020. The increase was due to a 19% increase in price, an 18% increase in volume and a 4% favorable impact from currency. The increase in price was led by strong execution in Latin America coupled with fewer corn replant units in North America. Higher volumes were driven by lower corn and cotton returns in North America, coupled with higher other seed sales in India. These volume gains were partially offset by robust early demand for corn in Latin America and an early settlement of the canola season in Canada, which shifted approximately $80 million of sales into the second quarter. Favorable currency impacts were primarily driven by the South African Rand and the Brazilian Real. Segment Operating EBITDA was $(217) million in the third quarter of 2021, an improvement of 23% compared to prior year. Continued price execution, higher volumes, lower royalties, and ongoing cost and productivity actions more than offset higher costs including commodity costs and SG&A. 3Q 3Q % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change North America $168 $97 73% 71% EMEA $153 $117 31% 22% Latin America $334 $246 36% 32% Asia Pacific $83 $63 32% 32% Total 3Q Seed Net Sales $738 $523 41% 37% Seed net sales were approximately $7.0 billion for the first nine months of 2021, up from approximately $6.5 billion in the year-ago period. The increase was due to a 4% increase in volume, a 3% increase in price and a 1% favorable impact from currency. The increase in volume was driven by higher soybean and corn sales in North America, market share gains in Brazil Safrinha, and canola growth in Canada. Price gains were driven by strong adoption of new Seed technology, including price execution in Latin America and EMEA, with corn price up 4% globally. These gains were partially offset by competitive pricing pressure in North America soybeans, where price was down 3%. Favorable currency impacts primarily from the Canadian Dollar and the Euro more than offset unfavorable impacts from the Brazilian Real. Segment Operating EBITDA was $1.5 billion for the first nine months of 2021, up 21% from the prior year. Continued price execution, volume gains, lower royalties, ongoing cost and productivity actions, and lower bad debt expense more than offset higher input costs and higher freight and warehousing costs. Segment Operating EBITDA margin improved by more than 240 basis points versus the prior-year period. YTD YTD % % ($ in millions, except where noted) 2021 2020 Change Organic1 Change North America $4,482 $4,290 4% 3% EMEA $1,398 $1,262 11% 8% Latin America $842 $668 26% 30% Asia Pacific $288 $296 (3)% (4)% Total YTD Seed Net Sales $7,010 $6,516 8% 7%
News Release 3Q 2021 6 Updated 2021 Outlook The Company increased its previously provided net sales guidance3 for the full year 2021 and now expects net sales in the range of $15.5 billion to $15.7 billion, which at the mid-point represents expected net sales growth of approximately 10% for the year. Operating EBITDA1 guidance was affirmed in the range of $2.5 billion to $2.6 billion – representing growth of 22% for the year at the midpoint. Operating EPS1 guidance was increased to $2.05 to $2.15 per share, which represents 40% growth at the midpoint. 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. Third Quarter Conference Call The Company will host a live webcast of its third quarter 2021 earnings conference call with investors to discuss its results and outlook tomorrow, November 4, 2021, 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. About Corteva Corteva, Inc. (NYSE: CTVA) 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 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 on Facebook, Instagram, LinkedIn, Twitter and YouTube. Cautionary Statement About Forward-Looking Statements This communication contains forward-looking statements and other estimates 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 and other estimates contained in the Private Securities Litigation Reform Act of 1995, and may be identified by their use of words like “guidance”, “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 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 DowDuPont, 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) failure to obtain or maintain the necessary regulatory approvals for some Corteva’s products; (ii) failure to successfully develop and commercialize Corteva’s pipeline; (iii) effect of the degree of public understanding and acceptance or perceived public acceptance of Corteva’s biotechnology and other agricultural products; (iv) effect of changes in agricultural and related policies of governments and international organizations; (v) effect of competition and consolidation in Corteva’s industry; (vi) effect of competition from manufacturers of generic products; (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 climate change and unpredictable seasonal and weather factors; (ix) risks related to oil and commodity markets; (x) competitor’s establishment of an intermediary platform for distribution of Corteva's products; (xi) impact of Corteva’s dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (xii) effect of industrial espionage and other disruptions to Corteva’s supply chain, information technology or network systems; (xiii) effect of volatility in Corteva’s input costs; (xiv) failure to realize the anticipated benefits of the internal reorganizations taken by DowDuPont in connection with the spin-off of Corteva and other cost savings initiatives; (xv) failure to raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xvi) failure of Corteva’s customers to pay their debts to Corteva, including customer financing programs; (xvii) increases in pension and other post-employment benefit plan funding obligations; (xviii) risks related to the indemnification obligations of legacy EID liabilities in connection with the separation of Corteva; (xix) effect of compliance with laws and requirements and adverse judgments on litigation; (xx) risks related to Corteva’s global operations; (xxi) failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions; (xxii) risks related to COVID-19; (xxiii) risks related to activist stockholders; (xxiv) Corteva’s intellectual property rights or defend against intellectual property claims asserted by others; (xxv) effect of counterfeit products; (xxvi) Corteva’s dependence on intellectual property cross-license agreements; (xxvii) other risks related to the Separation from DowDuPont; (xxvii) risks related to the Biden executive order Promoting Competition in the American Economy; and (xxix) risks associated with our CEO transition. 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 or other estimate, 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 or other estimates is included in the “Risk Factors” section of Corteva’s Annual Report on Form 10-K, as modified by subsequent Quarterly Reports on Forms 10-Q and Current Reports on Form 8-K.
News Release 3Q 2021 7 Regulation G (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 may include organic sales, organic growth (including by segment and region), operating EBITDA, operating earnings per share, and base tax rate. Management uses these measures internally for planning and forecasting, including allocating resources and evaluating incentive compensation. Management believes that these non-GAAP measures best reflect the ongoing performance of the Company during the periods presented and provide additional, useful information to investors as they provide insight with respect to ongoing operating results of the Company and a 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 A-5 of the Financial Statement Schedules. Corteva is not able to reconcile its forward-looking non-GAAP financial measures to their most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of the Company’s control, such as Significant Items, without unreasonable effort. For Significant items reported in the periods presented, refer to page A-10 of the Financial Statement Schedules. Beginning January 1, 2020, the Company presents accelerated prepaid royalty amortization expense as a significant item. Accelerated prepaid royalty amortization represents the noncash charge associated with the recognition of upfront payments made to Monsanto in connection with the Company’s non-exclusive license in the United States and Canada for Monsanto’s Genuity® Roundup Ready 2 Yield® Roundup Ready 2 Xtend® herbicide tolerance traits. During the five-year ramp-up period of Enlist E3TM, Corteva is expected to significantly reduce the volume of products with the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits beginning in 2021, with expected minimal use of the trait platform after the completion of the ramp-up. Additionally, on February 1, 2021, Corteva approved restructuring actions designed to right-size and optimize footprint and organizational structure according to the business needs in each region with the focus on driving continued cost improvement and productivity. The restructuring actions are expected to be substantially complete in 2021. 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 benefits, net and foreign exchange gains (losses) net, 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 (including goodwill impairment charges). Non-operating benefits, net consists of non-operating pension and other post-employment benefit (OPEB) credits, tax indemnification adjustments, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the Company as pre-tax income or expense. Operating earnings per share are defined as “Earnings per common share from continuing operations - diluted” excluding the after-tax impact of significant items (including goodwill impairment charges), the after tax impact of non-operating benefits, net, and 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 net gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in 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 tax rate is defined as the effective tax rate excluding the impacts of foreign exchange gains (losses) net, non-operating benefits, net, amortization of intangibles as of the Separation from DowDuPont, and significant items (including goodwill impairment charges). ® TM Corteva Agriscience and its affiliated companies. 11/03/2021 Media Contact Kasey Anderson +1 317-337-4478 kasey.anderson@corteva.com Investor Contact Jeff Rudolph +1 302-485-3704 jeff.rudolph@corteva.com
A-1
Corteva, Inc.
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 2,371 | $ | 1,863 | $ | 12,176 | $ | 11,010 | |||||||||||||||
| Cost of goods sold | 1,558 | 1,297 | 6,988 | 6,395 | |||||||||||||||||||
| Research and development expense | 297 | 284 | 871 | 837 | |||||||||||||||||||
| Selling, general and administrative expenses | 672 | 597 | 2,403 | 2,319 | |||||||||||||||||||
| Amortization of intangibles | 180 | 162 | 543 | 501 | |||||||||||||||||||
| Restructuring and asset related charges - net | 26 | 49 | 261 | 298 | |||||||||||||||||||
| Other income — net | 378 | 30 | 1,013 | 120 | |||||||||||||||||||
| Interest expense | 8 | 11 | 22 | 35 | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 8 | (507) | 2,101 | 745 | |||||||||||||||||||
| (Benefit from) provision for income taxes on continuing operations | (28) | (117) | 434 | 88 | |||||||||||||||||||
| Income (loss) from continuing operations after income taxes | 36 | (390) | 1,667 | 657 | |||||||||||||||||||
| (Loss) income from discontinued operations after income taxes | (4) | — | (59) | 1 | |||||||||||||||||||
| Net income (loss) | 32 | (390) | 1,608 | 658 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 2 | 2 | 8 | 18 | |||||||||||||||||||
| Net income (loss) attributable to Corteva | $ | 30 | $ | (392) | $ | 1,600 | $ | 640 | |||||||||||||||
| Basic earnings (loss) per share of common stock: | |||||||||||||||||||||||
| Basic earnings (loss) per share of common stock from continuing operations | $ | 0.05 | $ | (0.52) | $ | 2.25 | $ | 0.85 | |||||||||||||||
| Basic loss per share of common stock from discontinued operations | (0.01) | — | (0.08) | — | |||||||||||||||||||
| Basic earnings (loss) per share of common stock | $ | 0.04 | $ | (0.52) | $ | 2.17 | $ | 0.85 | |||||||||||||||
| Diluted earnings (loss) per share of common stock: | |||||||||||||||||||||||
| Diluted earnings (loss) per share of common stock from continuing operations | $ | 0.05 | $ | (0.52) | $ | 2.23 | $ | 0.85 | |||||||||||||||
| Diluted loss per share of common stock from discontinued operations | (0.01) | — | (0.08) | — | |||||||||||||||||||
| Diluted earnings (loss) per share of common stock | $ | 0.04 | $ | (0.52) | $ | 2.15 | $ | 0.85 | |||||||||||||||
| Average number of shares outstanding used in earnings (loss) per share (EPS) calculation (in millions) | |||||||||||||||||||||||
| Basic | 733.8 | 749.5 | 738.1 | 749.5 | |||||||||||||||||||
| Diluted | 739.5 | 749.5 | 744.0 | 752.0 | |||||||||||||||||||
A-2
Corteva, Inc.
Consolidated Balance Sheets
(Dollars in millions, except share amounts)
| September 30, 2021 | December 31, 2020 | September 30, 2020 | ||||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 2,779 | $ | 3,526 | $ | 2,768 | ||||||||||||||
| Marketable securities | 103 | 269 | 152 | |||||||||||||||||
| Accounts and notes receivable, net | 5,818 | 4,926 | 5,627 | |||||||||||||||||
| Inventories | 4,417 | 4,882 | 4,374 | |||||||||||||||||
| Other current assets | 1,029 | 1,165 | 1,167 | |||||||||||||||||
| Total current assets | 14,146 | 14,768 | 14,088 | |||||||||||||||||
| Investment in nonconsolidated affiliates | 67 | 66 | 62 | |||||||||||||||||
| Property, plant and equipment | 8,270 | 8,253 | 7,985 | |||||||||||||||||
| Less: Accumulated depreciation | 3,960 | 3,857 | 3,712 | |||||||||||||||||
| Net property, plant and equipment | 4,310 | 4,396 | 4,273 | |||||||||||||||||
| Goodwill | 10,130 | 10,269 | 10,110 | |||||||||||||||||
| Other intangible assets | 10,225 | 10,747 | 10,914 | |||||||||||||||||
| Deferred income taxes | 448 | 464 | 289 | |||||||||||||||||
| Other assets | 1,796 | 1,939 | 1,954 | |||||||||||||||||
| Total Assets | $ | 41,122 | $ | 42,649 | $ | 41,690 | ||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Short-term borrowings and finance lease obligations | $ | 1,372 | $ | 3 | $ | 2,142 | ||||||||||||||
| Accounts payable | 3,512 | 3,615 | 2,994 | |||||||||||||||||
| Income taxes payable | 95 | 123 | 168 | |||||||||||||||||
| Deferred revenue | 692 | 2,662 | 402 | |||||||||||||||||
| Accrued and other current liabilities | 2,134 | 2,145 | 2,028 | |||||||||||||||||
| Total current liabilities | 7,805 | 8,548 | 7,734 | |||||||||||||||||
| Long-Term Debt | 1,101 | 1,102 | 1,102 | |||||||||||||||||
| Other Noncurrent Liabilities | ||||||||||||||||||||
| Deferred income tax liabilities | 930 | 893 | 740 | |||||||||||||||||
| Pension and other post employment benefits - noncurrent | 4,583 | 5,176 | 5,904 | |||||||||||||||||
| Other noncurrent obligations | 1,724 | 1,867 | 1,864 | |||||||||||||||||
| Total noncurrent liabilities | 8,338 | 9,038 | 9,610 | |||||||||||||||||
| Commitments and contingent liabilities | ||||||||||||||||||||
| Stockholders' equity | ||||||||||||||||||||
| Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at September 30, 2021 - 730,267,000; December 31, 2020 - 743,458,000; and September 30, 2020 - 747,492,000 | 7 | 7 | 7 | |||||||||||||||||
| Additional paid-in capital | 27,712 | 27,707 | 27,895 | |||||||||||||||||
| Retained earnings | 666 | — | — | |||||||||||||||||
| Accumulated other comprehensive loss | (3,645) | (2,890) | (3,796) | |||||||||||||||||
| Total Corteva stockholders' equity | 24,740 | 24,824 | 24,106 | |||||||||||||||||
| Noncontrolling interests | 239 | 239 | 240 | |||||||||||||||||
| Total equity | 24,979 | 25,063 | 24,346 | |||||||||||||||||
| Total Liabilities and Equity | $ | 41,122 | $ | 42,649 | $ | 41,690 | ||||||||||||||
A-3
Corteva, Inc.
Consolidated Statement of Cash Flows
(Dollars in millions, except per share amounts)
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 1,608 | $ | 658 | |||||||
| Adjustments to reconcile net income to cash used for operating activities: | |||||||||||
| Depreciation and amortization | 926 | 868 | |||||||||
| Provision for (benefit from) deferred income tax | 151 | (153) | |||||||||
Net periodic pension and OPEB benefit, net | (959) | (255) | |||||||||
| Pension and OPEB contributions | (202) | (222) | |||||||||
| Net (gain) loss on sales of property, businesses, consolidated companies, and investments | (1) | 29 | |||||||||
| Restructuring and asset related charges - net | 261 | 298 | |||||||||
| Other net loss | 117 | 240 | |||||||||
| Changes in assets and liabilities - net | |||||||||||
| Accounts and notes receivable | (1,116) | (619) | |||||||||
| Inventories | 375 | 481 | |||||||||
| Accounts Payable | (41) | (629) | |||||||||
| Deferred revenue | (1,945) | (2,169) | |||||||||
| Other assets and liabilities | 7 | 236 | |||||||||
| Cash used for operating activities | (819) | (1,237) | |||||||||
| Investing activities | |||||||||||
| Capital expenditures | (413) | (301) | |||||||||
| Proceeds from sales of property, businesses, and consolidated companies - net of cash divested | 53 | 22 | |||||||||
| Investments in and loans to nonconsolidated affiliates | (3) | (1) | |||||||||
| Purchases of investments | (147) | (656) | |||||||||
| Proceeds from sales and maturities of investments | 310 | 498 | |||||||||
| Other investing activities - net | (1) | (7) | |||||||||
| Cash used for investing activities | (201) | (445) | |||||||||
| Financing activities | |||||||||||
| Net change in borrowings (less than 90 days) | 949 | 1,582 | |||||||||
| Proceeds from debt | 419 | 2,434 | |||||||||
| Payments on debt | (1) | (879) | |||||||||
| Repurchase of common stock | (750) | (83) | |||||||||
| Proceeds from exercise of stock options | 71 | 19 | |||||||||
| Dividends paid to stockholders | (295) | (291) | |||||||||
| Payments for acquisition of subsidiary's interest from the non-controlling interest | — | (60) | |||||||||
| Other financing activities | (28) | (27) | |||||||||
| Cash provided by financing activities | 365 | 2,695 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents | (78) | (64) | |||||||||
| (Decrease)/increase in cash, cash equivalents and restricted cash equivalents | (733) | 949 | |||||||||
| Cash, cash equivalents and restricted cash equivalents at beginning of period | 3,873 | 2,173 | |||||||||
| Cash, cash equivalents and restricted cash equivalents at end of period | $ | 3,140 | $ | 3,122 | |||||||
A-4
Corteva, Inc.
Consolidated Segment Information
(Dollars in millions, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| SEGMENT NET SALES - SEED | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Corn | $ | 437 | $ | 303 | $ | 4,505 | $ | 4,224 | ||||||||||||||||||
| Soybean | 157 | 116 | 1,494 | 1,382 | ||||||||||||||||||||||
| Other oilseeds | 94 | 62 | 661 | 529 | ||||||||||||||||||||||
| Other | 50 | 42 | 350 | 381 | ||||||||||||||||||||||
| Seed | $ | 738 | $ | 523 | $ | 7,010 | $ | 6,516 | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| SEGMENT NET SALES - CROP PROTECTION | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Herbicides | $ | 782 | $ | 583 | $ | 2,737 | $ | 2,315 | ||||||||||||||||||
| Insecticides | 416 | 395 | 1,261 | 1,218 | ||||||||||||||||||||||
| Fungicides | 339 | 261 | 911 | 714 | ||||||||||||||||||||||
| Other | 96 | 101 | 257 | 247 | ||||||||||||||||||||||
| Crop Protection | $ | 1,633 | $ | 1,340 | $ | 5,166 | $ | 4,494 | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| GEOGRAPHIC NET SALES - SEED | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
North America 1 | $ | 168 | $ | 97 | $ | 4,482 | $ | 4,290 | ||||||||||||||||||
EMEA 2 | 153 | 117 | 1,398 | 1,262 | ||||||||||||||||||||||
Latin America | 334 | 246 | 842 | 668 | ||||||||||||||||||||||
Asia Pacific | 83 | 63 | 288 | 296 | ||||||||||||||||||||||
Rest of World 3 | 570 | 426 | 2,528 | 2,226 | ||||||||||||||||||||||
| Net Sales | $ | 738 | $ | 523 | $ | 7,010 | $ | 6,516 | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| GEOGRAPHIC NET SALES - CROP PROTECTION | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
North America 1 | $ | 422 | $ | 390 | $ | 1,693 | $ | 1,528 | ||||||||||||||||||
EMEA 2 | 237 | 198 | 1,304 | 1,163 | ||||||||||||||||||||||
Latin America | 763 | 559 | 1,361 | 1,086 | ||||||||||||||||||||||
Asia Pacific | 211 | 193 | 808 | 717 | ||||||||||||||||||||||
Rest of World 3 | 1,211 | 950 | 3,473 | 2,966 | ||||||||||||||||||||||
| Net Sales | $ | 1,633 | $ | 1,340 | $ | 5,166 | $ | 4,494 | ||||||||||||||||||
| 1. Reflects U.S. & Canada | ||||||||||||||||||||||||||
| 2. Reflects Europe, Middle East, and Africa | ||||||||||||||||||||||||||
| 3. Reflects EMEA, Latin America, and Asia Pacific | ||||||||||||||||||||||||||
A-5
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2021 | |||||||||||||||||||||||||
| Net Sales (GAAP) | $ | 2,371 | $ | 12,176 | ||||||||||||||||||||||
| Less: Impacts from Currency and Portfolio | 57 | 162 | ||||||||||||||||||||||||
| Organic Sales (Non-GAAP) | $ | 2,314 | $ | 12,014 | ||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| OPERATING EBITDA | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Seed | $ | (217) | $ | (282) | $ | 1,523 | $ | 1,255 | ||||||||||||||||||
| Crop Protection | 206 | 130 | 897 | 677 | ||||||||||||||||||||||
| Corporate Expenses | (40) | (27) | (106) | (81) | ||||||||||||||||||||||
| Operating EBITDA (Non-GAAP) | $ | (51) | $ | (179) | $ | 2,314 | $ | 1,851 | ||||||||||||||||||
| RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER INCOME TAXES TO OPERATING EBITDA | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Income (loss) from continuing operations after income taxes (GAAP) | $ | 36 | $ | (390) | $ | 1,667 | $ | 657 | ||||||||||||||||||
| (Benefit from) provision for income taxes on continuing operations | (28) | (117) | 434 | 88 | ||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes (GAAP) | 8 | (507) | 2,101 | 745 | ||||||||||||||||||||||
| Depreciation and amortization | 309 | 285 | 926 | 868 | ||||||||||||||||||||||
| Interest income | (19) | (11) | (58) | (38) | ||||||||||||||||||||||
| Interest expense | 8 | 11 | 22 | 35 | ||||||||||||||||||||||
Exchange (gains) losses - net1 | (2) | 67 | 47 | 127 | ||||||||||||||||||||||
Non-operating benefits - net2 | (315) | (73) | (941) | (237) | ||||||||||||||||||||||
Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges3 | (19) | 3 | ||||||||||||||||||||||||
Significant items (benefit) charge4 | (21) | 49 | 214 | 351 | ||||||||||||||||||||||
| Operating EBITDA (Non-GAAP) | $ | (51) | $ | (179) | $ | 2,314 | $ | 1,851 | ||||||||||||||||||
1.Refer to page A-15 for pre-tax and after tax impacts of exchange losses - net.
2.Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) (benefits) costs, tax indemnification adjustments, environmental remediation and legal costs associated with legacy EID 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 Corteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense.
3.Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and nine months ended September 30, 2020, the unrealized mark-to-market (loss) gain was $(8) million and $19 million, respectively.
4.Refer to page A-10 for pre-tax and after tax impacts of significant items.
A-6
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| PRICE - VOLUME - CURRENCY ANALYSIS | ||||||||||||||||||||||||||
| REGION | ||||||||||||||||||||||||||
| Q3 2021 vs. Q3 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 103 | 21 | % | $ | 99 | 20 | % | 9 | % | 11 | % | 1 | % | — | % | ||||||||||
EMEA | 75 | 24 | % | 60 | 19 | % | 2 | % | 17 | % | 5 | % | — | % | ||||||||||||
Latin America | 292 | 36 | % | 252 | 31 | % | 11 | % | 20 | % | 5 | % | — | % | ||||||||||||
Asia Pacific | 38 | 15 | % | 40 | 16 | % | — | % | 16 | % | 1 | % | (2) | % | ||||||||||||
| Rest of World | 405 | 29 | % | 352 | 26 | % | 7 | % | 19 | % | 4 | % | (1) | % | ||||||||||||
| Total | $ | 508 | 27 | % | $ | 451 | 24 | % | 7 | % | 17 | % | 3 | % | — | % | ||||||||||
| SEED | ||||||||||||||||||||||||||
| Q3 2021 vs. Q3 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 71 | 73 | % | $ | 69 | 71 | % | 38 | % | 33 | % | 2 | % | — | % | ||||||||||
EMEA | 36 | 31 | % | 26 | 22 | % | 4 | % | 18 | % | 9 | % | — | % | ||||||||||||
Latin America | 88 | 36 | % | 79 | 32 | % | 23 | % | 9 | % | 4 | % | — | % | ||||||||||||
Asia Pacific | 20 | 32 | % | 20 | 32 | % | (1) | % | 33 | % | — | % | — | % | ||||||||||||
| Rest of World | 144 | 34 | % | 125 | 30 | % | 15 | % | 15 | % | 4 | % | — | % | ||||||||||||
| Total | $ | 215 | 41 | % | $ | 194 | 37 | % | 19 | % | 18 | % | 4 | % | — | % | ||||||||||
| CROP PROTECTION | ||||||||||||||||||||||||||
| Q3 2021 vs. Q3 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 32 | 8 | % | $ | 30 | 8 | % | 2 | % | 6 | % | — | % | — | % | ||||||||||
EMEA | 39 | 20 | % | 34 | 17 | % | 1 | % | 16 | % | 3 | % | — | % | ||||||||||||
Latin America | 204 | 36 | % | 173 | 31 | % | 5 | % | 26 | % | 5 | % | — | % | ||||||||||||
Asia Pacific | 18 | 9 | % | 20 | 10 | % | — | % | 10 | % | 2 | % | (3) | % | ||||||||||||
| Rest of World | 261 | 27 | % | 227 | 24 | % | 3 | % | 21 | % | 4 | % | (1) | % | ||||||||||||
| Total | $ | 293 | 22 | % | $ | 257 | 19 | % | 3 | % | 16 | % | 3 | % | — | % | ||||||||||
A-7
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| SEED PRODUCT LINE | ||||||||||||||||||||||||||
| Q3 2021 vs. Q3 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Corn | $ | 134 | 44 | % | $ | 120 | 40 | % | 23 | % | 17 | % | 4 | % | — | % | ||||||||||
| Soybeans | 41 | 35 | % | 36 | 31 | % | 20 | % | 11 | % | 4 | % | — | % | ||||||||||||
| Other oilseeds | 32 | 52 | % | 31 | 50 | % | 6 | % | 44 | % | 2 | % | — | % | ||||||||||||
| Other | 8 | 19 | % | 7 | 17 | % | 8 | % | 9 | % | 2 | % | — | % | ||||||||||||
| Total | $ | 215 | 41 | % | $ | 194 | 37 | % | 19 | % | 18 | % | 4 | % | — | % | ||||||||||
| CROP PROTECTION PRODUCT LINE | ||||||||||||||||||||||||||
| Q3 2021 vs. Q3 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Herbicides | $ | 199 | 34 | % | $ | 183 | 31 | % | 7 | % | 24 | % | 3 | % | — | % | ||||||||||
| Insecticides | 21 | 5 | % | 11 | 3 | % | — | % | 3 | % | 2 | % | — | % | ||||||||||||
| Fungicides | 78 | 30 | % | 69 | 26 | % | 3 | % | 23 | % | 5 | % | (1) | % | ||||||||||||
| Other | (5) | (5) | % | (6) | (6) | % | (10) | % | 4 | % | 1 | % | — | % | ||||||||||||
| Total | $ | 293 | 22 | % | $ | 257 | 19 | % | 3 | % | 16 | % | 3 | % | — | % | ||||||||||
A-8
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| PRICE - VOLUME - CURRENCY ANALYSIS | ||||||||||||||||||||||||||
| REGION | ||||||||||||||||||||||||||
| Nine Months 2021 vs. Nine Months 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 357 | 6 | % | $ | 296 | 5 | % | 1 | % | 4 | % | 1 | % | — | % | ||||||||||
EMEA | 277 | 11 | % | 169 | 7 | % | 4 | % | 3 | % | 4 | % | — | % | ||||||||||||
Latin America | 449 | 26 | % | 473 | 27 | % | 10 | % | 17 | % | (1) | % | — | % | ||||||||||||
Asia Pacific | 83 | 8 | % | 66 | 7 | % | 2 | % | 5 | % | 3 | % | (2) | % | ||||||||||||
| Rest of World | 809 | 16 | % | 708 | 14 | % | 5 | % | 9 | % | 2 | % | — | % | ||||||||||||
| Total | $ | 1,166 | 11 | % | $ | 1,004 | 9 | % | 3 | % | 6 | % | 2 | % | — | % | ||||||||||
| SEED | ||||||||||||||||||||||||||
| Nine Months 2021 vs. Nine Months 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 192 | 4 | % | $ | 148 | 3 | % | — | % | 3 | % | 1 | % | — | % | ||||||||||
EMEA | 136 | 11 | % | 97 | 8 | % | 5 | % | 3 | % | 3 | % | — | % | ||||||||||||
Latin America | 174 | 26 | % | 203 | 30 | % | 14 | % | 16 | % | (4) | % | — | % | ||||||||||||
Asia Pacific | (8) | (3) | % | (11) | (4) | % | 1 | % | (5) | % | 1 | % | — | % | ||||||||||||
| Rest of World | 302 | 14 | % | 289 | 13 | % | 7 | % | 6 | % | 1 | % | — | % | ||||||||||||
| Total | $ | 494 | 8 | % | $ | 437 | 7 | % | 3 | % | 4 | % | 1 | % | — | % | ||||||||||
| CROP PROTECTION | ||||||||||||||||||||||||||
| Nine Months 2021 vs. Nine Months 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 165 | 11 | % | $ | 148 | 10 | % | 3 | % | 7 | % | 1 | % | — | % | ||||||||||
EMEA | 141 | 12 | % | 72 | 6 | % | 2 | % | 4 | % | 6 | % | — | % | ||||||||||||
Latin America | 275 | 25 | % | 270 | 25 | % | 7 | % | 18 | % | — | % | — | % | ||||||||||||
Asia Pacific | 91 | 13 | % | 77 | 11 | % | 2 | % | 9 | % | 5 | % | (3) | % | ||||||||||||
| Rest of World | 507 | 17 | % | 419 | 14 | % | 4 | % | 10 | % | 4 | % | (1) | % | ||||||||||||
| Total | $ | 672 | 15 | % | $ | 567 | 13 | % | 4 | % | 9 | % | 3 | % | (1) | % | ||||||||||
A-9
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| SEED PRODUCT LINE | ||||||||||||||||||||||||||
| Nine Months 2021 vs. Nine Months 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Corn | $ | 281 | 7 | % | $ | 259 | 6 | % | 4 | % | 2 | % | 1 | % | — | % | ||||||||||
| Soybeans | 112 | 8 | % | 95 | 7 | % | — | % | 7 | % | 1 | % | — | % | ||||||||||||
| Other oilseeds | 132 | 25 | % | 117 | 22 | % | 4 | % | 18 | % | 3 | % | — | % | ||||||||||||
| Other | (31) | (8) | % | (34) | (9) | % | (4) | % | (5) | % | 1 | % | — | % | ||||||||||||
| Total | $ | 494 | 8 | % | $ | 437 | 7 | % | 3 | % | 4 | % | 1 | % | — | % | ||||||||||
| CROP PROTECTION PRODUCT LINE | ||||||||||||||||||||||||||
| Nine Months 2021 vs. Nine Months 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Herbicides | $ | 422 | 18 | % | $ | 349 | 15 | % | 4 | % | 11 | % | 3 | % | — | % | ||||||||||
| Insecticides | 43 | 4 | % | 24 | 2 | % | 3 | % | (1) | % | 2 | % | — | % | ||||||||||||
| Fungicides | 197 | 28 | % | 184 | 26 | % | 4 | % | 22 | % | 5 | % | (3) | % | ||||||||||||
| Other | 10 | 4 | % | 10 | 4 | % | (3) | % | 7 | % | — | % | — | % | ||||||||||||
| Total | $ | 672 | 15 | % | $ | 567 | 13 | % | 4 | % | 9 | % | 3 | % | (1) | % | ||||||||||
1.Organic sales is defined as price and volume and excludes currency and portfolio impacts.
A-10
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)
| SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Seed | $ | 38 | $ | (9) | $ | (98) | $ | (154) | |||||||||||||||
| Crop Protection | (8) | (40) | (51) | (151) | |||||||||||||||||||
| Corporate | (9) | — | (65) | (46) | |||||||||||||||||||
| Total significant items before income taxes | $ | 21 | $ | (49) | $ | (214) | $ | (351) | |||||||||||||||
| SIGNIFICANT ITEMS - PRE-TAX, AFTER TAX, AND EPS IMPACTS | ||||||||||||||||||||||||||||||||||||||
| Pre-tax | After tax6 | ($ Per Share) | ||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
| 1st Quarter | ||||||||||||||||||||||||||||||||||||||
Restructuring and asset related charges, net 1 | $ | (100) | $ | (70) | $ | (77) | $ | (57) | $ | (0.10) | $ | (0.08) | ||||||||||||||||||||||||||
Loss on divestiture 2 | — | (53) | — | (43) | — | (0.06) | ||||||||||||||||||||||||||||||||
Income tax items 3 | — | — | — | (19) | — | (0.02) | ||||||||||||||||||||||||||||||||
1st Quarter — Total | $ | (100) | $ | (123) | $ | (77) | $ | (119) | $ | (0.10) | $ | (0.16) | ||||||||||||||||||||||||||
| 2nd Quarter | ||||||||||||||||||||||||||||||||||||||
Restructuring and asset related charges, net 1 | $ | (135) | $ | (179) | $ | (107) | $ | (143) | $ | (0.14) | $ | (0.19) | ||||||||||||||||||||||||||
Income tax items 3 | — | — | — | 29 | — | 0.04 | ||||||||||||||||||||||||||||||||
2nd Quarter — Total | $ | (135) | $ | (179) | $ | (107) | $ | (114) | $ | (0.14) | $ | (0.15) | ||||||||||||||||||||||||||
| 3rd Quarter | ||||||||||||||||||||||||||||||||||||||
Restructuring and asset related charges, net 1 | $ | (26) | $ | (49) | $ | (18) | $ | (27) | $ | (0.03) | $ | (0.04) | ||||||||||||||||||||||||||
Equity securities mark-to-market gain4 | 47 | — | 35 | — | 0.05 | — | ||||||||||||||||||||||||||||||||
| 3rd Quarter - Total | $ | 21 | $ | (49) | $ | 17 | $ | (27) | $ | 0.02 | $ | (0.04) | ||||||||||||||||||||||||||
Year-to-date Total 5 | $ | (214) | $ | (351) | $ | (167) | $ | (260) | $ | (0.22) | $ | (0.35) | ||||||||||||||||||||||||||
1.Third quarter, second quarter, and first quarter 2021 included restructuring and asset related benefits (charges) of $(26), $(135) and $(100), respectively. The charges for the third quarter primarily relate to a $(21) charge associated with the 2021 Restructuring Actions and a $(5) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. The charges for the second quarter primarily relate to a $(23) charge associated with the 2021 Restructuring Actions and a $(112) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. The charges for the first quarter primarily relate to a $(89) charge associated with the 2021 Restructuring Actions and a $(7) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
Third quarter, second quarter and first quarter 2020 included restructuring and asset related charges of $(49), $(179) and $(70), respectively. The charge for the third quarter included a $(30) charge related to the Execute to Win Productivity Program, a $(10) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits, and a $(9) charge associated with the DowDuPont Synergy Program. The charge for the second quarter included a $(41) charge related to the Execute to Win Productivity Program and a $(138) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. The charge for the first quarter included a $(63) charge related to the Execute to Win Productivity Program, a $(10) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits, and a $3 asset related benefit associated with the DowDuPont Synergy Program.
The after-tax charge for the third quarter of 2020 includes a net tax benefit of $11 related to a change in estimate on the full year impact of The Act's foreign provisions.
2.First quarter 2020 included a loss of $(53) included in other income - net related to the sale of the La Porte site, for which the company signed an agreement during the first quarter 2020, and closed during the first quarter of 2021.
A-11
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)
3.Second quarter 2020 reflected a benefit of $29 due to an elective change in accounting method that altered the 2019 impact of the business separation on the 2017 Tax Cuts and Jobs Act's foreign tax provisions. First quarter 2020 included an after tax charge related to the impact of a state tax valuation allowance in the U.S. based on a change in judgment about the realizability of a deferred tax asset.
4.Third quarter 2021 included a benefit relating to a $47 mark-to-market gain on equity securities.
5.Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.
6.Unless specifically addressed in notes above, the income tax effect on significant items was calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.
A-12
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| Operating Earnings (Loss) Per Share (Non-GAAP) | ||||||||||||||||||||||||||
| Operating earnings (loss) per share is defined as earnings (loss) per share from continuing operations – diluted, excluding non-operating benefits - net, amortization of intangibles (existing as of Separation), net unrealized gain or loss from mark-to-market activity on certain foreign currency derivative instruments that do not qualify for hedge accounting, and significant items. | ||||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| $ | $ | EPS (diluted) | EPS (diluted) | |||||||||||||||||||||||
| Net income (loss) from continuing operations attributable to Corteva (GAAP) | $ | 34 | $ | (392) | $ | 0.05 | $ | (0.52) | ||||||||||||||||||
Less: Non-operating benefits - net, after tax 1 | 242 | 56 | 0.33 | 0.08 | ||||||||||||||||||||||
| Less: Amortization of intangibles (existing as of Separation), after tax | (140) | (126) | (0.18) | (0.17) | ||||||||||||||||||||||
Less: Mark-to-market gains on certain foreign currency contracts not designated as hedges, after tax2 | 15 | 0.02 | ||||||||||||||||||||||||
| Less: Significant items benefit (charge), after tax | 17 | (27) | 0.02 | (0.04) | ||||||||||||||||||||||
| Operating Loss (Non-GAAP) | $ | (100) | $ | (295) | $ | (0.14) | $ | (0.39) | ||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| $ | $ | EPS (diluted) | EPS (diluted) | |||||||||||||||||||||||
| Net income from continuing operations attributable to Corteva (GAAP) | $ | 1,659 | $ | 639 | $ | 2.23 | $ | 0.85 | ||||||||||||||||||
Less: Non-operating benefits - net, after tax 1 | 716 | 180 | 0.96 | 0.24 | ||||||||||||||||||||||
| Less: Amortization of intangibles (existing as of Separation), after tax | (423) | (377) | (0.57) | (0.50) | ||||||||||||||||||||||
Less: Mark-to-market losses on certain foreign currency contracts not designated as hedges, after tax2 | (2) | — | ||||||||||||||||||||||||
| Less: Significant items charge, after tax | (167) | (260) | (0.22) | (0.35) | ||||||||||||||||||||||
| Operating Earnings (Non-GAAP) | $ | 1,535 | $ | 1,096 | $ | 2.06 | $ | 1.46 | ||||||||||||||||||
1.Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) benefits (costs), tax indemnification adjustments, and environmental remediation and legal costs associated with legacy EID 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 Corteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense.
2.Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and nine months ended September 30, 2020, the unrealized mark-to-market (loss) gain was $(8) million and $19 million, respectively.
A-13
Corteva, Inc.
Operating EBITDA to Operating Earnings Per Share
(Dollars in millions, except per share amounts)
| Operating EBITDA to Operating Earnings (Loss) Per Share | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Operating EBITDA (Non-GAAP)1 | $ | (51) | $ | (179) | $ | 2,314 | $ | 1,851 | ||||||||||||||||||
| Depreciation | (129) | (123) | (383) | (367) | ||||||||||||||||||||||
| Interest Income | 19 | 11 | 58 | 38 | ||||||||||||||||||||||
| Interest Expense | (8) | (11) | (22) | (35) | ||||||||||||||||||||||
Benefit from (provision for) income taxes on continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and exchange gains/(losses), net (Non-GAAP)1 | 74 | 58 | (366) | (249) | ||||||||||||||||||||||
Base income tax rate from continuing operations (Non-GAAP)1 | 43.8 | % | 19.2 | % | 18.6 | % | 16.7 | % | ||||||||||||||||||
Exchange losses - net, after tax2 | (3) | (49) | (58) | (124) | ||||||||||||||||||||||
| Net (income) loss attributable to non-controlling interests | (2) | (2) | (8) | (18) | ||||||||||||||||||||||
Operating (Loss) Earnings (Non-GAAP)1 | $ | (100) | $ | (295) | $ | 1,535 | $ | 1,096 | ||||||||||||||||||
| Diluted Shares (in millions) | 739.5 | 749.5 | 744.0 | 752.0 | ||||||||||||||||||||||
Operating (Loss) Earnings Per Share (Non-GAAP)1 | $ | (0.14) | $ | (0.39) | $ | 2.06 | $ | 1.46 | ||||||||||||||||||
1. Refer to pages A-5 through A-9, A-12 and A-14 for Non-GAAP reconciliations.
2. Refer to page A-15 for pre-tax and after tax impacts of exchange (losses) gains - net.
A-14
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| 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 (losses) gains, significant items, amortization of intangibles (existing as of Separation), mark-to-market gains on certain foreign currency contracts not designated as hedges, and non-operating benefits - net. | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Income (loss) from continuing operations before income taxes (GAAP) | $ | 8 | $ | (507) | $ | 2,101 | $ | 745 | |||||||||||||||
Add: Significant items - (benefit) charge 1 | (21) | 49 | 214 | 351 | |||||||||||||||||||
| Non-operating benefits - net | (315) | (73) | (941) | (237) | |||||||||||||||||||
| Amortization of intangibles (existing as of Separation) | 180 | 162 | 543 | 501 | |||||||||||||||||||
Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges2 | (19) | 3 | |||||||||||||||||||||
Less: Exchange gains (losses), net3 | 2 | (67) | (47) | (127) | |||||||||||||||||||
(Loss) income from continuing operations before income taxes, significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and exchange gains (losses), net (Non-GAAP) | $ | (169) | $ | (302) | $ | 1,967 | $ | 1,487 | |||||||||||||||
(Benefit from) provision for income taxes on continuing operations (GAAP) | $ | (28) | $ | (117) | $ | 434 | $ | 88 | |||||||||||||||
Add: Tax (expenses) benefits on significant items charge1 | (4) | 22 | 47 | 91 | |||||||||||||||||||
| Tax expenses on non-operating benefits - net | (73) | (17) | (225) | (57) | |||||||||||||||||||
| Tax benefits on amortization of intangibles (existing as of Separation) | 40 | 36 | 120 | 124 | |||||||||||||||||||
Tax (expenses) benefits on mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges2 | (4) | 1 | |||||||||||||||||||||
Tax (expenses) benefits on exchange gains (losses), net3 | (5) | 18 | (11) | 3 | |||||||||||||||||||
(Benefit from) provision for income taxes on continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and exchange gains (losses), net (Non-GAAP) | $ | (74) | $ | (58) | $ | 366 | $ | 249 | |||||||||||||||
Effective income tax rate (GAAP) | (350.0) | % | 23.1 | % | 20.7 | % | 11.8 | % | |||||||||||||||
| Significant items, non-operating benefits, amortization of intangibles (existing as of Separation), and mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges effect | 393.9 | % | (2.5) | % | (1.1) | % | 6.3 | % | |||||||||||||||
| Tax rate from continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), and mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges | 43.9 | % | 20.6 | % | 19.6 | % | 18.1 | % | |||||||||||||||
Exchange gains (losses), net effect3 | (0.1) | % | (1.4) | % | (1.0) | % | (1.4) | % | |||||||||||||||
Base income tax rate from continuing operations (Non-GAAP) | 43.8 | % | 19.2 | % | 18.6 | % | 16.7 | % | |||||||||||||||
| 1. See Significant Items table for further detail. | |||||||||||||||||||||||
2. Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and nine months ended September 30, 2020, the unrealized mark-to-market (loss) gain was $(8) million and $19 million, respectively. | |||||||||||||||||||||||
| 3. See page A-15 for further details of exchange (losses) gains. | |||||||||||||||||||||||
A-15
Corteva, Inc.
(Dollars in millions, except per share amounts)
| Exchange Gains/Losses | ||||||||||||||||||||||||||
| The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. 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 on net monetary asset positions. The hedging program gains (losses) are largely taxable (tax deductible) in the United States (U.S.), whereas the offsetting exchange gains (losses) on the remeasurement of the net monetary asset positions are often not taxable (tax deductible) in their local jurisdictions. The net pre-tax exchange gains (losses) are recorded in other income (expense) - net and the related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the Consolidated Statements of Operations. | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Subsidiary Monetary Position Loss | ||||||||||||||||||||||||||
| Pre-tax exchange losses | $ | (32) | $ | (61) | $ | (47) | $ | (300) | ||||||||||||||||||
| Local tax benefits (expenses) | 3 | 16 | (11) | 44 | ||||||||||||||||||||||
| Net after tax impact from subsidiary exchange losses | $ | (29) | $ | (45) | $ | (58) | $ | (256) | ||||||||||||||||||
| Hedging Program Gain (Loss) | ||||||||||||||||||||||||||
| Pre-tax exchange gains (losses) | $ | 34 | $ | (6) | $ | — | $ | 173 | ||||||||||||||||||
| Tax (expenses) benefits | (8) | 2 | — | (41) | ||||||||||||||||||||||
| Net after tax impact from hedging program exchange gains (losses) | $ | 26 | $ | (4) | $ | — | $ | 132 | ||||||||||||||||||
| Total Exchange Loss | ||||||||||||||||||||||||||
| Pre-tax exchange gains (losses) | $ | 2 | $ | (67) | $ | (47) | $ | (127) | ||||||||||||||||||
| Tax (expenses) benefits | (5) | 18 | (11) | 3 | ||||||||||||||||||||||
| Net after tax exchange losses | $ | (3) | $ | (49) | $ | (58) | $ | (124) | ||||||||||||||||||
| As shown above, the "Total Exchange Loss" is the sum of the "Subsidiary Monetary Position Loss" and the "Hedging Program Gain (Loss)." | ||||||||||||||||||||||||||