Corteva, Inc.

Good day, everyone, and welcome to the Corteva Q4 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Megan Britt. Please go ahead, ma'am.

Good morning and welcome to the fourth quarter and full year 2019 earnings conference call for Corteva Agriscience. The call is available to investors and media via webcast. We have prepared presentation slides to supplement our comments during this call. These slides are posted on the Investor Relations section of the Corteva website and through the link to our webcast. Speaking on the call today are Jim Collins, Chief Executive Officer, Tim Glenn, Executive Vice President and Chief Commercial Officer, Rajan Gajadia, Executive Vice President of Business Platforms, and Greg Friedman, Executive Vice President and Chief Financial Officer. During this call, we will make forward-looking statements regarding our expectations for the future. Slides two and three of our earnings release contain our forward-looking statement disclaimers. All statements that address expectations or projections about the future are forward-looking statements. These statements reflect our current expectations but are not guarantees of future performance and are subject to risk and uncertainty regarding assumptions. Our SEC filings provide discussion of some of the factors that could cause material differences in our actual results. We are providing information on a pro forma basis prepared in conformity with Regulation SX to provide the most meaningful comparison. We provide a pro forma basis discussion in our earnings release and slides. Unless otherwise specified, all historical financial measures presented today exclude significant items, which can be found in the schedules that accompany our earnings release. We will also refer to non-GAAP measures, a reconciliation to the most directly comparable GAAP financial measure where available and other associated disclosures are contained in our earnings release and on our website. It's now my pleasure to turn the call over to Joe.

Thank you, Megan, and thank you and welcome to the participants joining the call. Earlier today, we reported fourth quarter and full year results for 2019. Our key operational performance indicators for the full year are captured on chart four. Net sales on a reported basis decreased 3%. versus the prior year, primarily due to currency. On an organic basis, net sales were flat, as weather-related declines in North America were offset by above-market organic growth in other regions. Outside of North America, reported net sales were up 1%, and organic sales were up 7%, demonstrating the strength of our pipeline, brands, and multi-channel distribution strategy. Operating EBITDA, declined 4% compared to prior year, largely driven by currency and weather-related price and volume declines in North America. Continued realization of cost synergies, disciplined spending actions, increased sales from new products, and gains on divestitures were a benefit. Operating EBITDA margin declined 10 basis points for the full year for the company. In crop protection, new product sales and gains on divestitures resulted in margin expansion. And C, weather-related price and volume declines in North America drove margin decline. Selling, general and administrative, and R&D costs declined 4% for the full year due to cost synergy realizations and the benefit from disciplined spending actions. In total, we realized approximately $350 million in cost synergies, accelerating $50 million of savings into 2019 relative to our expectations at the beginning of the year. Overall, these indicators show that we capitalized on the strength of our product pipeline and realized above-market organic growth outside of North America. We also delivered on our cost synergy commitments and intensified our productivity actions to support sustainable operating EBITDA expansion. Finally, we acted on our portfolio to divest products that are not aligned with our strategy moving forward. Turning to slide five, we have previously talked about ROIC as our key performance indicator to assess our effectiveness in using capital to generate earnings. We are targeting a sustained mid to high-teens percent performance on this metric. Using a four-quarter average, we delivered a return of 19.8% for 2019. This result demonstrates our focus on driving effective risk management, reducing inventory carryover, and maintaining diligence on accounts receivable and collections. Going forward, our ERP implementation will be critical to maintaining performance at this level. A harmonized ERP system will allow our teams to have real-time transparency and actionable data to drive continued working capital productivity. Slide six highlights our progress on our five priorities for shareholder value creation. These priorities guide our strategic actions and underscore the quality of the results we are committed to achieve. Starting first on culture, given the historic market backdrop, it is sometimes easy to forget that we launched a new pure play agriculture company in June with the new Corteva brand, new values, and a new purpose. In our first quarter as a public company, we put in place a cultural transformation called Execute to Win. This is an example of how we intend to operate differently as Corteva. In 2020, we are targeting $30 million in operating EBITDA benefit as we get started on delivering our target of $500 million in incremental operating EBITDA over the next five years. Moving to capital allocation, we look to invest productively in innovation and growth. An example is the project announced last quarter to add additional manufacturing capacity for key spinosan insecticide products. While continuing to invest in innovation and growth, we are committed to delivering value to shareholders in the form of quarterly dividends and share repurchases. In total, our actions returned approximately $220 million to shareholders in 2019. On our priority related to developing innovative solutions, we received regulatory approvals in 2019 for several proprietary traits. In February, we received the final import approvals necessary to launch and list E3 soybean products and chrome corn products. In late December, China approved our Conquesta insect control trait in soybeans. Conquesta soybean import approval had been in progress in China since 2014. The receipt of China approval or Conquesta, is a necessary step for commercialization of Conquesta E3 product in Latin America. This is another important milestone toward trade independence. Today, we announced our intention to accelerate product development and production of Enlist E3 soybean products along with Enlist One and Enlist Duo herbicides ahead of the 2021 selling season. This decision reflects our focus on rapidly ramping up differentiated technology solutions that we expect will enable greater choice and value for growers over time. On our priority around best in class cost structure, we delivered $50 million in cost synergies in the quarter and approximately $350 million for the full year. Overall, we have realized cumulative cost savings through the end of 2019 of $800 million out of the $1.2 billion commitment expected through 2021. In 2019, we also authorized and launched an ERP harmonization project that is focused on eliminating approximately $200 million in costs inherited with the spin. Finally, weather-related impacts and currency obscured several positive signs of operational momentum in 2019. Of note are strong growth in insecticides and our positive organic net sales performance outside of North America. We took several actions in seed, like launching our global retail brand, Bravant, and restructuring our brands in North America to create a more powerful regional anchor brands that we expect to deliver above market growth in the future and continued momentum on share gains in local markets. And now, I'll turn the call over to Tim to provide some details on our commercial performance.