Corteva(CTVA) - 2024 Q2 - Quarterly Report

Financial Performance - The company reported net sales of $6,112 million for Q2 2024, a 1% increase compared to Q2 2023, driven by a 2% price increase, partially offset by a 1% unfavorable impact from portfolio changes [185]. - Income from continuing operations after income taxes was$ 1,056 million in Q2 2024, compared to $880 million in Q2 2023 [185]. - Operating EBITDA for Q2 2024 was$ 1,917 million, an increase from $1,746 million in Q2 2023, driven by higher Crop Protection volumes and reduced net royalty expenses [185]. - For the six months ended June 30, 2024, net sales were$ 10,604 million, a 3% decrease from the same period last year, reflecting a 4% decrease in volume [185]. - The company expects net sales for 2024 to be in the range of $17.2 billion to$ 17.5 billion, with Operating EBITDA projected between $3.4 billion and$ 3.6 billion [211]. - The company returned approximately $730 million to shareholders during the six months ended June 30, 2024, through share repurchase programs and dividends [185]. - The Board of Directors approved a 6.25% increase in the common stock dividend from$ 0.16 to $0.17 per share [185]. Cost and Expenses - Cost of goods sold decreased to$ 2,918 million in Q2 2024 from $3,137 million in Q2 2023, primarily due to ongoing cost and productivity actions, despite higher commodity and input costs [185]. - Research and Development (R&D) expenses increased to$ 357 million (6% of net sales) in Q2 2024, up from $329 million (5% of net sales) in Q2 2023 [193]. - Selling, General and Administrative (SG&A) expenses were$ 1,054 million (17% of net sales) for Q2 2024, slightly up from $1,045 million (17% of net sales) in Q2 2023 [194]. - The effective tax rate for Q2 2024 was 21.1%, up from 18.8% in Q2 2023, influenced by geographic mix of earnings and withholding taxes [199][200]. - Other income (expense) - net was$ (113) million for Q2 2024, an improvement from $(134) million in Q2 2023, driven by a favorable tax indemnification adjustment [197]. Restructuring and Charges - Restructuring and asset-related charges for Q2 2024 were$ 92 million, up from $60 million in Q2 2023, mainly related to the Crop Protection Operations Strategy Restructuring Program [185]. - The company anticipates future cash payments related to restructuring charges to be between$ 90 million and $120 million, primarily for severance and contract terminations [179]. - The Crop Protection Operations Strategy Restructuring Program is expected to yield approximately$ 100 million in annual savings by 2025 [179]. - The company expects to incur approximately $180 million to$ 230 million in net pre-tax restructuring charges during 2024 [212]. Segment Performance - Seed net sales for Q2 2024 were $4,331 million, a 2% increase from$ 4,264 million in Q2 2023, driven by a 5% increase in price [225]. - Segment operating EBITDA for the Seed segment in Q2 2024 was $1,698 million, up 16% from$ 1,458 million in Q2 2023, with an EBITDA margin improvement of approximately 500 basis points [226]. - Crop Protection segment net sales for Q2 2024 remained flat at $1,781 million compared to Q2 2023, while segment operating EBITDA decreased to$ 255 million from $320 million [228]. - For the first half of 2024, Crop Protection net sales were$ 3,522 million, down 11% from $3,970 million in the first half of 2023, primarily due to a 7% decrease in volume and a 4% decline in price [235]. Cash Flow and Liquidity - Cash provided by operating activities for continuing operations was$ (1,999) million for the six months ended June 30, 2024, an improvement from $(2,480) million in the same period of 2023, primarily due to favorable changes in working capital [257]. - Cash used for investing activities was$ (305) million for the six months ended June 30, 2024, significantly lower than $(1,544) million for the same period in 2023, mainly due to the acquisitions of Stoller and Symborg in 2023 [258]. - Cash provided by financing activities was$ 1,518 million for the six months ended June 30, 2024, down from $3,379 million in the same period of 2023, attributed to higher borrowings in 2023 for working capital and acquisitions [259]. - Corteva had access to approximately$ 6.2 billion in committed and uncommitted unused credit lines as of June 30, 2024, providing support for short-term liquidity needs [248]. - The company refinanced its Revolving Credit Facilities in June 2024, extending maturity dates and lowering the facility amount to $2.85 billion for the five-year facility [250]. Legal Proceedings - The company is involved in various legal proceedings, including a lawsuit filed by the FTC alleging unfair competition practices [275]. - Corteva filed a lawsuit against Inari Agriculture, Inc. for claims of Plant Variety Protection infringement and other related issues [277]. - Bayer filed a lawsuit against Corteva in August 2022 regarding E3® soybeans, claiming entitlement to royalties based on two patents, with ongoing discussions for resolution [281]. - Corteva filed a lawsuit against Bayer in October 2022, seeking a declaration that Bayer cannot collect patent royalties on the Roundup Ready® Corn 2 trait after patent expiration, with a trial scheduled for October 2024 [282]. - Environmental litigation related to legacy EIDP businesses includes multiple lawsuits alleging PFOA contamination across the U.S. and the Netherlands, impacting Corteva's current operations [283].