SEC Filing | Corteva Agriscience

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38710

Corteva, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

82-4979096

(State or other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

9330 Zionsville Road,

Indianapolis,

Indiana

46268

(833)

267-8382

974 Centre Road,

Wilmington,

Delaware

19805

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Commission File Number 1-815

EIDP, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

51-0014090

(State or other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

9330 Zionsville Road,

Indianapolis,

Indiana

46268

(833)

267-8382

974 Centre Road,

Wilmington,

Delaware

19805

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act for Corteva, Inc.:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CTVA	New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act for EIDP, Inc.:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$3.50 Series Preferred Stock	CTAPrA	New York Stock Exchange
$4.50 Series Preferred Stock	CTAPrB	New York Stock Exchange

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Corteva, Inc.

Yes

EIDP, Inc.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Corteva, Inc.

Yes

EIDP, Inc.

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Corteva, Inc.

Large Accelerated Filer

Accelerated Filer o

Non-Accelerated Filer

Smaller reporting company o

Emerging growth company o

EIDP, Inc.

Large Accelerated Filer

Accelerated Filer o

Non-Accelerated Filer

Smaller reporting company o

Emerging growth company o

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.


Corteva, Inc.			o
EIDP, Inc.			o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Corteva, Inc.

Yes

EIDP, Inc.

Yes

Corteva, Inc. had 710,873,000 shares of common stock, par value $0.01 per share, outstanding at April 27, 2023.

EIDP, Inc. had 200 shares of common stock, par value $0.30 per share, outstanding at April 27, 2023, all of which are held by Corteva, Inc.

EIDP, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q (as modified by a grant of no-action relief dated February 12, 2018) and is therefore filing this form with reduced disclosure format.

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CORTEVA, Inc.

EIDP, Inc.

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		Page
Explanatory Note
Part I	Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income (Loss)	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to the Interim Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
	Cautionary Statements About Forward-Looking Statements	41
	Recent Developments	42
	Overview	43
	Results of Operations	44

	Recent Accounting Pronouncements	46
	Segment Reviews	46
	Non-GAAP Financial Measures	49
	Liquidity & Capital Resources	51

	Contractual Obligations	53

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54

Part II	Other Information

Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
Exhibit Index		58
Signature		59
Consolidated Financial Statements of EIDP, Inc. (Unaudited)		60

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Explanatory Note

Corteva owns 100% of the outstanding common stock of EIDP (defined below). EIDP is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Securities Exchange Act of 1934, as amended.

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

• "Corteva" or "the company" refers to Corteva, Inc. and its consolidated subsidiaries (including EIDP);

• "EIDP" refers to EIDP, Inc. and its consolidated subsidiaries or EIDP excluding its consolidated subsidiaries, as the context may indicate;

• "DowDuPont" refers to DowDuPont Inc. and its subsidiaries prior to the Separation of Corteva (defined below);

• "Historical Dow" refers to The Dow Chemical Company and its consolidated subsidiaries prior to the Internal Reorganization (defined below);

• "Historical DuPont" refers to EIDP prior to the Internal Reorganization (defined below);

• "Internal Reorganizations" refers to the series of internal reorganization and realignment steps undertaken by Historical DuPont and Historical Dow to realign its business into three groups: agriculture, materials science and specialty products. Refer to the company’s Annual Report on Form 10-K for the year ended December 31, 2022 for further information.

• "Dow Distribution" refers to the separation of DowDuPont's materials science business into a separate and independent public company, on April 1, 2019 by way of a distribution of Dow Inc. through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow Inc.’s common stock;

• "Merger” refers to the all-stock merger of equals strategic combination between Historical Dow and Historical DuPont on August 31, 2017;

• "Dow" refers to Dow Inc. after the Dow Distribution;

• "DuPont" refers to DuPont de Nemours, Inc. after the Separation of Corteva (on June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc.);

• "Separation" or "Separation of Corteva" refers to June 1, 2019, when Corteva, Inc. became an independent, publicly
traded company;

• "Corteva Distribution" refers to the pro rata distribution of all of the then-issued and outstanding shares of Corteva, Inc.'s common stock on June 1, 2019, which was then a wholly-owned subsidiary of DowDuPont, to holders of DowDuPont's common stock as of the close of business on May 24, 2019;

• "Distributions" refers to the Dow Distribution and the Corteva Distribution; and

• “Letter Agreement” refers to the Letter Agreement executed by DuPont and Corteva on June 1, 2019, which sets forth certain additional terms and conditions related to the Separation, including certain limitations on each party’s ability to transfer certain businesses and assets to third parties without assigning certain of such party’s indemnification obligations under the Corteva Separation Agreement to the other party to the transferee of such businesses and assets or meeting certain other alternative conditions.

This Quarterly Report on Form 10-Q is a combined report being filed separately by Corteva, Inc. and EIDP. The information in this Quarterly Report on Form 10-Q is equally applicable to Corteva, Inc. and EIDP, except where otherwise indicated.

The separate EIDP financial statements and footnotes for areas that differ from Corteva, are included within this Quarterly Report on Form 10-Q and begin on page 61. Footnotes of EIDP that are identical to that of Corteva are cross-referenced accordingly.

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PART I. FINANCIAL INFORMATION

Item 1.CONSOLIDATED FINANCIAL STATEMENTS

Corteva, Inc.

Consolidated Statements of Operations (Unaudited)


(In millions, except per share amounts)	Three Months Ended March 31,
	2023		2022
Net sales	$	4,884	$	4,601
Cost of goods sold	2,771		2,724
Research and development expense	316		268
Selling, general and administrative expenses	726		735
Amortization of intangibles	160		179
Restructuring and asset related charges - net	33		5
Other income (expense) - net	(71)		17
Interest expense	31		9
Income (loss) from continuing operations before income taxes	776		698
Provision for (benefit from) income taxes on continuing operations	169		121
Income (loss) from continuing operations after income taxes	607		577
(Loss) income from discontinued operations after income taxes	(8)		(10)
Net income (loss)	599		567
Net income (loss) attributable to noncontrolling interests	4		3
Net income (loss) attributable to Corteva	$	595	$	564
Basic earnings (loss) per share of common stock:
Basic earnings (loss) per share of common stock from continuing operations	$	0.85	$	0.79
Basic earnings (loss) per share of common stock from discontinued operations	(0.01)		(0.01)
Basic earnings (loss) per share of common stock	$	0.84	$	0.78
Diluted earnings (loss) per share of common stock:
Diluted earnings (loss) per share of common stock from continuing operations	$	0.84	$	0.79
Diluted earnings (loss) per share of common stock from discontinued operations	(0.01)		(0.01)
Diluted earnings (loss) per share of common stock	$	0.83	$	0.78

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


(In millions)	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	599	$	567
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments	134		91
Adjustments to pension benefit plans	2		8
Adjustments to other benefit plans	(2)		3

Derivative instruments	(67)		(25)
Total other comprehensive income (loss)	67		77
Comprehensive income (loss)	666		644
Comprehensive income (loss) attributable to noncontrolling interests - net of tax	4		3
Comprehensive income (loss) attributable to Corteva	$	662	$	641

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Balance Sheets (Unaudited)


(In millions, except share amounts)	March 31, 2023		December 31, 2022		March 31, 2022
Assets
Current assets
Cash and cash equivalents	$	1,646	$	3,191	$	2,031
Marketable securities	85		124		290
Accounts and notes receivable - net	8,678		5,701		7,275
Inventories	6,585		6,811		4,986
Other current assets	1,335		968		1,296

Total current assets	18,329		16,795		15,878
Investment in nonconsolidated affiliates	87		102		91
Property, plant and equipment	8,633		8,551		8,483
Less: Accumulated depreciation	4,362		4,297		4,150
Net property, plant and equipment	4,271		4,254		4,333
Goodwill	10,508		9,962		10,109
Other intangible assets	10,137		9,339		9,865
Deferred income taxes	508		479		471
Other assets	1,660		1,687		1,886

Total Assets	$	45,500	$	42,618	$	42,633
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations	$	3,787	$	24	$	1,018
Accounts payable	3,957		4,895		3,685
Income taxes payable	298		183		180
Deferred revenue	2,712		3,388		2,435
Accrued and other current liabilities	2,477		2,254		2,335

Total current liabilities	13,231		10,744		9,653
Long-term debt	1,241		1,283		1,154
Other noncurrent liabilities
Deferred income tax liabilities	1,255		1,119		1,203
Pension and other post employment benefits - noncurrent	2,242		2,255		2,983
Other noncurrent obligations	1,692		1,676		1,704

Total noncurrent liabilities	6,430		6,333		7,044
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at March 31, 2023 - 710,678,000; December 31, 2022 - 713,419,000; and March 31, 2022 - 725,320,000	7		7		7
Additional paid-in capital	27,844		27,851		27,760

Retained earnings	487		250		750
Accumulated other comprehensive income (loss)	(2,739)		(2,806)		(2,821)
Total Corteva stockholders’ equity	25,599		25,302		25,696
Noncontrolling interests	240		239		240
Total equity	25,839		25,541		25,936
Total Liabilities and Equity	$	45,500	$	42,618	$	42,633

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Cash Flows (Unaudited)


(In millions)	Three Months Ended March 31,
	2023		2022
Operating activities
Net income (loss)	$	599	$	567
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Depreciation and amortization	287		307
Provision for (benefit from) deferred income tax	(85)		(37)
Net periodic pension and OPEB benefit, net	36		(71)
Pension and OPEB contributions	(50)		(55)
Net (gain) loss on sales of property, businesses, consolidated companies and investments	1		3
Restructuring and asset related charges - net	33		5
Other net loss	48		104
Changes in assets and liabilities, net
Accounts and notes receivable	(2,708)		(2,372)
Inventories	324		234
Accounts payable	(908)		(406)
Deferred revenue	(685)		(782)
Other assets and liabilities	(203)		(227)
Cash provided by (used for) operating activities	(3,311)		(2,730)
Investing activities
Capital expenditures	(151)		(179)
Proceeds from sales of property, businesses and consolidated companies - net of cash divested	21		5
Acquisitions of businesses - net of cash acquired	(1,463)		—
Investments in and loans to nonconsolidated affiliates	—		(6)

Purchases of investments	—		(234)
Proceeds from sales and maturities of investments	40		10
Proceeds from settlement of net investment hedge	42		—

Cash provided by (used for) investing activities	(1,511)		(404)
Financing activities
Net change in borrowings (less than 90 days)	3,084		744
Proceeds from debt	626		311
Payments on debt	(56)		—
Repurchase of common stock	(252)		(235)
Proceeds from exercise of stock options	7		40
Dividends paid to stockholders	(107)		(102)


Other financing activities, net	(28)		(44)
Cash provided by (used for) financing activities	3,274		714
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents	(2)		(31)
Increase (decrease) in cash, cash equivalents and restricted cash equivalents	(1,550)		(2,451)
Cash, cash equivalents and restricted cash equivalents at beginning of period	3,618		4,836
Cash, cash equivalents and restricted cash equivalents at end of period1	$	2,068	$	2,385

1. See page 16 for reconciliation of cash and cash equivalents and restricted cash equivalents presented in interim Consolidated Balance Sheets to total cash, cash equivalents and restricted cash equivalents presented in the interim Consolidated Statements of Cash Flows.

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Equity (Unaudited)


(In millions, except per share amounts)	Common Stock		Additional Paid-in Capital "APIC"		Retained Earnings		Accumulated Other Comp Income (Loss)		Non-controlling Interests		Total Equity
2022
Balance at January 1, 2022	$	7	$	27,751	$	524	$	(2,898)	$	239	$	25,623
Net income (loss)					564				3		567
Other comprehensive income (loss)							77				77
Share-based compensation			(31)								(31)
Common dividends ($0.14 per share)					(102)						(102)
Issuance of Corteva stock			40								40
Repurchase of common stock					(235)						(235)
Other - net					(1)				(2)		(3)
Balance at March 31, 2022	$	7	$	27,760	$	750	$	(2,821)	$	240	$	25,936


(In millions, except per share amounts)	Common Stock		Additional Paid-in Capital "APIC"		Retained Earnings		Accumulated Other Comp Income (Loss)		Non- controlling Interest		Total Equity
2023
Balance at January 1, 2023	$	7	$	27,851	$	250	$	(2,806)	$	239	$	25,541
Net income (loss)					595				4		599
Other comprehensive income (loss)							67				67
Share-based compensation			(14)								(14)
Common dividends ($0.15 per share)					(107)						(107)
Issuance of Corteva stock			7								7
Repurchase of common stock					(252)						(252)
Other - net					1				(3)		(2)
Balance at March 31, 2023	$	7	$	27,844	$	487	$	(2,739)	$	240	$	25,839

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


			Corteva, Inc.
			Notes to the Interim Consolidated Financial Statements (Unaudited)

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Note		Page
1	Summary of Significant Accounting Policies	9
2	Recent Accounting Guidance	9
3	Business Combinations	9
4	Revenue	11
5	Restructuring and Asset Related Charges - Net	14
6	Supplementary Information	15
7	Income Taxes	17
8	Earnings Per Share of Common Stock	18
9	Accounts and Notes Receivable - Net	19
10	Inventories	20
11	Goodwill and Other Intangible Assets	20
12	Short-Term Borrowings, Long-Term Debt and Available Credit Facilities	21
13	Commitments and Contingent Liabilities	23
14	Stockholders' Equity	30
15	Pension Plans and Other Post Employment Benefits	32
16	Financial Instruments	33
17	Fair Value Measurements	38
18	Segment Information	38
19	Subsequent Events	40

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year. These interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, collectively referred to as the “2022 Annual Report.” The interim Consolidated Financial Statements include the accounts of the company and all of its subsidiaries in which a controlling interest is maintained.

Since 2018, Argentina has been considered a hyper-inflationary economy under U.S. GAAP and therefore the U.S. Dollar (“USD”) is the functional currency for our related subsidiaries. Argentina contributes approximately 5 percent to both the company's annual net sales and segment operating EBITDA. We remeasure net monetary assets and translate our financial statements utilizing the official Argentine Peso (“Peso”) to USD exchange rate. The ability to draw down Peso cash balances is limited at this time due to government restrictions and market availability of U.S. Dollars. The devaluation of the Peso relative to the USD over the last several years has resulted in the recognition of exchange losses (refer to Note 6 – Supplementary Information, to the interim Consolidated Financial Statements and the company's 2022 Annual Report). As of March 31, 2023, a further 10 percent deterioration in the official Peso to USD exchange rate would reduce the USD value of our net monetary assets and negatively impact pre-tax earnings by approximately $10 million. We will continue to assess the implications to our operations and financial reporting.

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU includes amendments that require a buyer in supplier finance programs to disclose key terms of the programs and related obligations, including a rollforward of such obligations. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward requirements, which are effective for fiscal years beginning after December 15, 2023, and early adoption is permitted. Retrospective application to all periods in which a balance sheet is presented is required, except for the rollforward requirement, which will be applied prospectively. The company adopted this guidance on January 1, 2023 which resulted in certain disclosures being added relating to supplier financing programs and related obligations. See Note 13 – Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements, for additional information.

NOTE 3 - BUSINESS COMBINATIONS

On March 1, 2023 ("Acquisition Date"), Corteva completed its previously announced acquisitions of all the outstanding equity interests in Stoller Group, Inc. (“Stoller”), one of the largest independent companies in the Biologicals industry, and Quorum Vital Investment, S.L. and its affiliates (“Symborg”), an expert in microbiological technologies. The purchase price for Stoller and Symborg was $1,224 million, subject to a working capital adjustment, and $370 million, respectively. These acquisitions supplement the crop protection business with additional biological tools that complement evolving farming practices.

The operating results of Stoller and Symborg, since the Acquisition Date, did not have a material impact to the company's interim Consolidated Financial Statements for the three months ended March 31, 2023. Additionally, supplemental pro forma information have not been presented since the reported amounts in the company's interim Consolidated Financial Statements for the current period and comparative prior period would not be materially different had these acquisitions occurred as of January 1, 2022.

Purchase Price Allocation

The company performed a preliminary purchase price allocation and assessment of the fair value of the assets acquired and liabilities assumed as of the Acquisition Date. Due to the timing of the acquisitions, at March 31, 2023, the company continues to evaluate aspects of net working capital, acquired intangible assets, and property, plant and equipment. The company will finalize the purchase price allocation as it obtains the information necessary to complete the valuation during the measurement period. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the Acquisition Date.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the preliminary purchase price allocation to the assets acquired and liabilities assumed for the Stoller and Symborg acquisitions, as of the Acquisition Date:


(In millions)	Stoller		Symborg
Assets
Cash and cash equivalents	$	95	$	—
Accounts and notes receivable	238		16
Inventories	86		10
Other current assets	26		1
Property, plant and equipment	51		3
Goodwill	381		138
Other intangible assets	655		298
Deferred income taxes	7		—
Other assets	8		2
Total assets acquired	$	1,547	$	468
Liabilities
Short-term borrowings	59		—
Accounts payable	25		12
Income taxes payable	2		—
Accrued and other current liabilities	60		12
Long-term debt	3		—
Deferred income tax liabilities	154		74

Other noncurrent obligations	20		—
Total liabilities assumed	$	323	$	98