Corteva, Inc.

Good morning and welcome to Corteva's first quarter 2021 earnings conference call. Today's conference is being recorded.

Good morning and welcome to Corteva's first quarter 2021 earnings conference call. Our prepared remarks today will be led by Jim Collins, Chief Executive Officer, and Dave Anderson, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, Executive Vice President and Chief Commercial Officer, and Rajan Gajaria, Executive Vice President of Business Platforms, will join the Q&A session. We have prepared presentation slides to supplement our remarks during this call, which are posted on the investor relations section of the Quarteto website and through the link to our webcast. During the call, we will make forward-looking statements, which are our expectations for or about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including but not limited to those discussed on this call and in the risk factor section of our reports filed with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. On our investor relations website, you can find our earnings press release and related schedules, along with our supplemental financial summary slide deck, which is intended to supplement our prepared remarks for today's call. These items provide a reconciliation of differences between reported GAAP and non-GAAP financial measures, and should not be considered a substitute for the measures of financial performance prepared in accordance with GAAP. It is now my pleasure to turn the call over to Jim.

Thank you, Jeff, and welcome to the participants joining the call today. Starting on slide four, as I step back and reflect on how the organization closed out 2020 with strong sales and earnings growth in the fourth quarter, it is impressive how our teams executed in a very complex and dynamic market environment with the overlay of the COVID pandemic. It displays the focus and execution of our strategy and the commitment to delivering value. That momentum was sustained through the first quarter and through focused heads down execution, we delivered a strong start to the year with margin increases in both segments. I am really pleased with these results. Our technology leadership remains strong, evidenced by ongoing demand for our new and differentiated products. We continue to launch and rapidly scale these technologies while taking focused actions on our cost and productivity priorities. Collectively, this focus on our commitments is helping to drive meaningful margin expansion today and looking forward. Importantly, our team around the world delivering these results is resilient. They continue to prove their agility in the face of ongoing market volatility, including the pandemic, and remain intent on prioritizing the safety of colleagues while serving our customers and stakeholders at every turn. And lastly, I'm pleased to also share that we welcomed four new directors to our board during the quarter. The addition of these directors and their background and experience will complement an already strong and diverse board and will serve as a catalyst for the ongoing advancement of our strategy, reinforcing our commitment to deliver on our value creation priorities. So let's look at slide five. which is our financial results for the quarter. We delivered strong organic sales growth across both seed and crop protection, leading to 6% organic growth for the company as a whole. Importantly, we realized better operating leverage on our sales growth this quarter as operating EBITDA grew 14%, and margins expanded more than 150 basis points, a strong execution on our growth targets, coupled with improved SG&A, more than offset the market-driven cost headwinds we faced in the quarter. The phenomena of the market-driven cost inflation is a common theme we are seeing across industries, including raw materials and logistics. Dave is going to take us through the key market dynamics and other critical drivers for the remainder of 2021. On capital allocation, we returned approximately $450 million to shareholders in the quarter via share buybacks and dividends. and we remain on track to complete the majority of our remaining repurchases under the $1 billion program by the first half of 2021. Returning cash to shareholders continues to be a high priority for Corteva and a critical part of our balanced approach to capital allocation. This first quarter performance is another important proof point that our value creation strategy is working, reinforcing our confidence that we will meet our commitments for 2021. Shifting to the market backdrop on slide six, we remain encouraged by the strengthening global ag fundamentals while also navigating macroeconomic uncertainties around the world. The ag outlook turned positive in the fourth quarter of 2020 as a result of rising farm income levels and constructive demand out of China. Today, farm incomes remain elevated on strong commodity prices and we continue to see record global demand for ag commodities. As a result, we are seeing ending stocks drawn down and expectations that grower income levels will be at all-time highs, even with the easing government payments this year. In March, the USDA issued the prospective planting survey results, which indicated flattish corn acres and approximate 5 million acre increase in soybeans for the U.S. As you recall, Our original estimates were between 5 and 8 million additional acres coming into corn and bean production for 2021, mostly going into soybeans. Given how we position our products with our customers, we are in a good position to take advantage of any potential upside in acres as market conditions continue to evolve. Commodity prices in Brazil remain strong, as concerns of dry weather are lowering expectations on sofrenia yields. We also expect to see planted area expansion in Brazil, with the potential for low- to mid-single-digit increases in corn planted area for the late 2021-early 2022 season. Although exchange rates have recently trended favorably, the market remains volatile, and we continue to monitor for any further fluctuations. More importantly, based on how we are seeing the futures market shape up, We believe these fundamentals will continue into at least 2022, as strong grain demand and supply challenges keep ending stocks low. This constructive backdrop provides Corteva further momentum for value creation as growers turn to best-in-class technology to maximize productivity and value. So let's turn to slide seven, and I'll provide some more detail on the strength of our global sales diversity and where we are capitalizing on momentum across the globe. In North America, organic sales were down 2% for the quarter, against a difficult 2020 seed comparison. While 2020 first quarter seed volumes benefited from early demand amidst favorable weather conditions, we experienced a more normalized delivery pattern this year. We expect corn volumes to increase in the second quarter as our seed deliveries in the U.S. Pioneer brand have caught up to the prior year as of today. On seed pricing, first quarter was negatively impacted, mostly due to brand mix. Our second quarter deliveries to date reflect improvement in corn pricing despite aggressive market competitiveness. We remain excited about the demand and traction we are seeing in the Enlist soybean launch, and still expect Enlist to represent about 30% of the U.S. soybean market in 2021, an important milestone towards our goal of 50% market penetration. North America crop protection had a strong start to the year with 11% organic growth on strong demand for new technologies, including Enlist herbicide and solid pricing execution in response to rising raw material, freight, and logistics costs. In Europe, Middle East, and Africa, organic sales grew 6% on record corn and sunflower seed volumes as supply concerns and commodity cost pressures drove an early start to the spring sales season. Our portfolio of new and differentiated products, such as Aeralex and Rinscor herbicides, remain in high demand, which enabled us to drive price and volume in crop protection. During the quarter, we also obtained key regulatory approvals including the registration of Univoke fungicide with Inotrek Active for sale and use in the UK, a major milestone for cereal growers needing innovative and sustainable chemistry solutions to protect their crops. In Latin America, we delivered 38% organic sales growth on strong volumes and execution of our price-for-value strategy. In seed, volumes grew 39%. on strong Brazil safrinha sales and early demand in other countries. In crop protection, volume grew 10% on significant demand for new and differentiated technologies such as isoclast and gemvelva insecticides and enlist herbicides. Pricing actions reflect strong product demand and partially offset unfavorable currency impacts in the Brazilian RAI. In Asia Pacific, we realized 9% organic sales growth compared to the prior year on both volume and price improvements. While seed volumes were down on the shift of some corn sales to the second half, crop protection growth was led by further penetration of gemvelva and paraxalt insecticides. Now, Dave will provide more detail on our results and our expectations for the rest of the year, but let me first say we are very excited to have Dave join the Corteva team and I look forward to the contributions he will make in bolstering our momentum and execution looking ahead. So Dave, over to you.