Corteva, Inc.

Good day and welcome to the Corteva third quarter 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kim Booth, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to Corteva's third quarter 2022 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer, and Dave Anderson, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, Executive Vice President, Seed Business Unit, and Robert King, Executive Vice President, Crop Protection Business Unit, 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 Corteva website and through the link to our webcast. During this call we will make forward looking statements which are our expectations 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 factors section of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statement. Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release and related schedules, along with our supplemental financial summary slide deck available on our investor relations website. It is now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us today. There are several key messages and updates we would like to share with you. Along with our solid results for the first nine months of the year, that demonstrate our strategic plan is really starting to come to life. Last quarter, you will recall we announced key actions associated with the completion of a comprehensive portfolio review. These actions include plans to exit non-strategic geographies and product lines, emphasizing a strategy of differentiation to drive our competitive advantages, bringing unique, sustainable ag technology solutions to farmers to bring advancements in global food security, climate change, and the energy transition. Today, we'd like to highlight a few proof points of our immediate execution of that strategy to accelerate performance and growth during the third quarter. First, let me reiterate that we are committed to disciplined and strategic portfolio management, prioritizing core markets, products, and crops to simplify operations, and a focus investment in differentiated and sustainably advantaged solutions. In terms of operational excellence, we are continuously evaluating our business to optimize manufacturing costs and streamline our supply chain. In that regard, we have decided to discontinue all U.S. commercial sunflower seed production servicing Europe by the end of 2022 crop production year. Given our previous announcement to exit Russia, as well as various capacity expansions, we now have sufficient capacity to supply our European sunflower commercial seed needs from within the EMEA region. On the CP side, we announced last month that we signed a definitive agreement to acquire Symborg, a leader in microbiological technologies. As we've said before, we will be utilizing M&A to supplement our organic growth. by focusing on adjacencies and utilizing it to fill gaps in our portfolio. We are able to accelerate advancements in technology and our speed to market. Corteva first collaborated with Symborg to scale up and bring farmers Nutritia N and Blue N, both nutrient efficiency products, as part of a distribution agreement between the two companies. Respected throughout the biologicals industry, Symborg possesses a diversified existing portfolio an emerging biocontrols pipeline and a very skilled workforce. Biologicals are expected to represent about 25% of the crop protection market by 2035. This transaction reaffirms our commitment to biologicals and building a more differentiated and sustainably advantaged portfolio that provides cost-effective solutions for farmers. as well as our commitment to forming strategic partnerships to help accelerate innovation and growth. As it relates to our AI portfolio, we sold our Methamil insecticide business outside of Brazil in August. We also made the global business decision to exit commodity glyphosate products, meaning glyphosate not mixed with other herbicides. Lastly, On an operational front, we've decided to cease production of certain intermediary products at the Pittsburgh, California manufacturing site by the end of 2025, allowing us to streamline and simplify our operations. These moves enable us to redeploy capital for investment in growth markets to provide innovative and sustainable solutions for farmers. We also remain very focused on bringing global farmers differentiated next generation solutions to help them be successful in this volatile and dynamic environment. In seed, our top tier genetics continue to be in high demand as growers prioritize yields to help offset inflation. In crop protection, new product sales improved by almost 50% compared to prior year. This was led by products like Enlist herbicide, which has more than doubled in sales compared to the same period last year. The Enlist system continues to gain traction in the market, given its superior performance and grower confidence, delivering approximately $1.1 billion in net sales during the first nine months of the year, an increase of nearly 80% versus the same period last year. We expect 2023 Enlist market penetration in the U.S. to be in the mid-50% range, representing approximately 70% of Corteva's lineup. As I've said before, this is a remarkable feat considering this technology has only been in the market for three seasons. Our refined strategy and putting the farmer first has been quite successful this year. We have delivered double digit sales growth and over 190 basis points of margin improvement so far. As a result of this momentum, we have raised the midpoint of our operating EBITDA guidance and now expect between three and 3.1 billion for the full year outlook, which Dave will address in greater detail shortly. Now let's spend a few minutes on the ag market on slide five. Ag fundamentals remain robust with commodity prices above historical averages. We are encouraged by resilient demand as well as healthy farmer income levels, and see broad opportunities in both business units as customers drive farm productivity. Farm income levels are expected to remain strong in 2023, following two record-setting years. We continue to believe that global grains and oilseeds markets need two consecutive normal crop years to stabilize global supplies, and 2022 is not a year to rebuild stocks. For the upcoming season, we're expecting U.S. planted area to be up slightly with a bias towards corn. Outside of the U.S., market growth looks strong in key markets like Brazil, where planted area is expected to increase low to mid single digits. Strong demand combined with tight supply and weather-related reductions in estimated yields have continued to drive low stocks-to-use ratios for both corn and soybeans during the 22-23 crop year. North American harvest is nearly complete for both corn and soybeans, with USDA crop progress in the high 70s for corn and high 80s for soybeans. While yields have been strong in the northern and eastern Corn Belt, they have been below normal in the western Corn Belt and Plains where it has been dry. Overall yield estimates by the USDA have been in the low 170s for corn and about 50 for soybeans. keeping crop prices elevated and farmer income strong in 2022 and into 2023. We'll continue to monitor the ongoing effects of inflation and strengthening U.S. dollar while remaining focused on what we can control. With disciplined execution on our refined strategy, we expect price mix and productivity actions to continue to outpace inflationary cost pressures. Given healthy market fundamentals, we believe farmers will continue to have strong margins and liquidity. They will prioritize investments in top-tier genetics and crop protection technology to maximize and protect yields. And with that, let me turn it over to Dave to provide details on our financial performance, as well as updates on the outlook.