Corteva, Inc.

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to Corteva AgriScience 4Q 2025 earnings. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Kim Booth, VP, Investor Relations. Please go ahead.

Good morning, and welcome to Corteva's fourth quarter 2025 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer, and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Judd O'Connor, 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 releases 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, everyone, and thanks for joining us. I hope your year is off to a great start. Before we get into our results, I'd like to provide a quick update on our separation and what you can expect this year. It is still early in our overall planning, but we remain on track for a second half separation. most likely sometime in the fourth quarter. Now for some details. Over the past several months, a subset of our board has been very busy with a global CEO search for new Corteva. We are making good progress and expect to make an announcement on that in the first half. At or around the same time, we intend to launch the official name and brand identity of SpinCo, which is very exciting for me at least, and will really bring this transition to life. As we progress into the latter part of the first half, we'll be announcing the core executive leadership teams for both companies. We'll be working with the credit agencies on our capital structure submissions, and we will likely have filed the initial and first amendment of our Form 10 with the SEC. The second half is where we'll essentially be getting the separation to the finish line. We expect to go effective on the Form 10, announce our board appointment, and receive the final approval on the capital structures of the two companies. We'll also be completing the separation of our IT systems. And last but not least, we currently expect to hold our Investor Day events in mid-September. As for net disenergies, we are still estimating roughly 100 million, 50 million of which is built into this year's guide. We'll keep you informed on our progress on a timely basis over the coming months. So now let's move to our financial performance. Let me start by saying, by all accounts, 2025 was a strong year for Corteva. Our results for the fourth quarter were in line with our expectations, with the exception of outperformance on our controllables and even stronger cash flow generation than we anticipated. We grew the top line low single digits while improving operating EBITDA low double digits. leading to over 200 basis points of margin expansion, pushing us over the 22% mark for the first time as a public company. This is a testament to growing demand of our technology, exceptional performance of our dedicated commercial teams, and combined with disciplined execution on operational efficiency in both businesses. Our seed business performed well again this year with organic growth in every region, as well as share gains in both corn and soybeans. Seed delivered about 340 million of net cost improvements, as well as 90 million in royalty improvement, reflecting our growing position in North America corn and progress in soybean licensing in Brazil. As noted last quarter, we're expecting to cross double-digit trade penetration for Conquesta this year in Brazil, the largest soybean market on the planet. with over 300 basis points to margin expansion this year alone, and our out-licensing business just catching its stride, I have to say it's fun to imagine what things might look like in another few years, with our growth platforms, including gene editing and hybrid wheat, really starting to take off. Our crop protection business is also performing well, delivering top and bottom line growth, as well as margin expansion this year, in what I'd still describe as less than ideal market conditions. As we updated you last quarter, this business already has an incredible 9 billion pipeline of differentiated technologies. But in order to remain ahead of the curve, we are in the process of ongoing asset and sourcing optimization. For the full year, our CP business generated over 300 million of productivity and cost benefits, which improves our resilience as we make our way towards what we still expect to be improving market conditions in 2026. From an industry perspective, the overall ag fundamentals remain mixed. We're still seeing record demand for food and fuel, and major crop inventories are within normal ranges despite large crops in Brazil and North America. Farmers continue to prioritize top tier seed technologies while managing tighter margins. Given the high corn area in the U.S. last year, it's logical to assume we'll see a few million acres shift back to soybeans in 2026. all of which is factored into our guide. In the crop protection market, most notable is that we are expecting modest growth in 2026, something we haven't seen in a while. Although we continue to experience competitive pricing dynamics in some major markets, including Latin America and Asia Pacific, underlying farmer demand in terms of applications remains consistent with historical levels. So what does all this mean for 2026? We are reiterating our preliminary operating EBITDA midpoint of $4.1 billion, which is 7% growth versus the prior year. Included in that estimate is momentum in our seed licensing business, growth in crop protection volumes driven by new products and biologicals, and productivity benefits in both businesses. It's still quite early in the year, with winter still firmly in place, but we feel good about how 2026 is shaping up. Now, before I turn the call over to David, I'd like to address some new developments since we last spoke in November. We recently reached a comprehensive resolution with Bayer related to our seed, Freedom to Operate. Not only does this agreement allow SpinCo to remain focused on its forward trajectory and value creation opportunities, including continued investment in innovation, it also provides business certainty from ongoing litigation. We are pleased to have reached an agreement which solidifies the use of existing technology rights in our own corn, canola, and cotton product portfolios, including our own germplasm. As a result of this resolution and the progress we've been making across the broader outlicensing spectrum, we now expect to achieve royalty neutrality in 2026, which is two years ahead of our most recent expectations. James Heiting- In North America, this agreement will accelerate the introduction of existing Corteva proprietary triple stack corn technologies for licensing. We now expect to be licensing as early as 2027, an acceleration of five years. James Heiting- This resolution also facilitates the introduction of our third gen above ground trade platform in North America corn, which will be available for branded sales and licensing by the end of the decade. This is an acceleration of two years. Finally, this resolution includes a new licensing arrangement, which allows us to expand our addressable market by entering the cotton licensing market in the U.S., a space in which we do not currently participate. Leveraging our strong 2025 free cash flow, we committed to a payment of $610 million, which was largely completed last month. However, over the course of the next 10 years, we believe this agreement will generate about a billion of aggregate earnings upside for Corteva across our corn, cotton, and canola portfolios through both outlicensing and branded sales. In summary, we consider this resolution to be a win for our long-term strategic objectives. But more importantly, this is a win for farmers and for agriculture at large, as this resolution strengthens competition and offers farmers more choices when making purchasing decisions. Getting back to 2026, Let me wrap up by saying what I say to our employees. We are one team until we're not. Based on our latest timeline, we'll spend more time together than apart in 2026. And we're going to stay focused on controlling the controllables. Our intended separation is about sharpening focus, accelerating innovation, and unlocking value that has been earned through performance. And we are committed to delivering results like this past year throughout this transition period. With that, I'll turn the call over to David.