Corteva, Inc.

Good day and welcome to the Corteva 4Q 2022 earnings call. Today's call is being recorded. At this time, I'd like to turn the conference over to Kim Booth, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to Corteva's fourth quarter and full year 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 statements. 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's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning and thanks for joining us today. I hope everyone's year is off to a great start. There are several key messages I'd like to share with you today, including our strong 2022 performance, an overview of the market fundamentals, and an update on our value creation plan with a closer look at what's ahead for 2023. Corteva executed well amidst a dynamic market environment, delivering double-digit sales and operating EBITDA growth, as well as over 200 basis points in margin expansion. Enlist E3 soybeans reached about 45% market penetration in the U.S., and new product sales and crop protection reached over $1.9 billion for the full year, an increase of more than 30% over prior year. On capital deployment, we returned more than $1.4 billion to shareholders via dividends and share repurchases for the full year. Our 2022 results support the value creation plan presented at Investor Day, where we outlined a framework to achieve $4.4 billion of EBITDA by 2025 with a margin range of 21% to 23%. And we're on track to do just that. The framework is simple and straightforward and hinges upon four key elements, portfolio simplification, royalty neutrality, product mix, and operational improvements. The strategic and operational actions implemented since we announced the plan show that we are already making progress on accelerating our performance, and we were even able to achieve some of that value in 2022. We remain committed to our value creation plan, and 2023 is going to be a year largely focused on execution. As a reminder, a critical part of our refined strategy involves increasing investment in R&D. We're focused on delivering greater value to farmers through more differentiated and sustainably advantaged solutions and leveraging our pipeline to drive advancements in global food security and climate change. On the M&A front, we announced our intent to acquire Symborg and Stoller, two biological acquisitions which are both set to close in the first half of 2023. These acquisitions reinforce our commitment to providing farmers with environmentally friendly, sustainable tools with proven effectiveness that complement evolving farming practices and help them meet changing market expectations. As communicated previously, we expect that biologicals will be the fastest growing segment in the crop protection industry over the next decade. Turning to the outlook, we entered 2023 well-positioned with best-in-class technologies to continue to deliver market-leading value for our customers as we tilt our portfolio towards our differentiated offerings. This is a big step change year for our Enlist platform. We're expecting E3 U.S. soybean market penetration in the mid-50s and a royalty reduction benefit of over $100 million. Organic sales of new crop protection products, including our Enlist herbicide, are expected to grow by an additional 20%, and we're on track to cross a billion in annual sales with our Spinozans franchise. More broadly, we expect that favorable pricing and mix, in addition to productivity and restructuring benefits, will continue to outpace headwinds associated with cost inflation. We will also continue to monitor the effects of currency, which we believe will be a headwind this year. As a result, for 2023, we expect to deliver 5% sales growth in between $3.4 billion and $3.6 billion in operating EBITDA, translating into yet another year of impressive margin expansion. Now let's spend a few minutes on the market outlook on slide 5. Market fundamentals remain constructive as we enter 2023. Global grain and oilseed stocks are tight due to last year's below-trend yields, which were impacted by dry weather in the Northern Hemisphere and the war in Ukraine. Crop prices, which remain well above historic averages, are supported by tight supply-demand fundamentals globally. Farmers are financially healthy with strong liquidity, and they will continue to prioritize yield to meet market demand and offset inflationary pressures. Farm income is expected to be one of the largest ever, albeit below the record achieved in 2022. And demand for corn and soybean oil is expected to grow in 2023, supported by strong energy prices and policy adjustments focusing on low carbon energy sources. Crop area is forecasted to be up in most major crop producing regions in 2023. The USDA gave a January update indicating U.S. planted area is estimated to be 91 million acres for corn and 89 million acres for soybeans, both showing increases versus 2022. We continue to monitor the effects of weather around the globe, including the drought conditions in Argentina. Brazil is projecting that national grain output for the 22-23 crop season will be a new record, translating to low- to mid-single-digit growth. We expect these positive market conditions to continue throughout the year and could extend well past 2023, depending on supply demand dynamics, which is consistent with our previous messaging that global grains and oil seed inventories need to be rebuilt over at least two years. And with that, let me turn it over to Dave to provide details on our financial performance, as well as updates on the 23 outlook.