Corteva(CTVA) - 2024 Q1 - Quarterly Results

Financial Statements This section presents Corteva's consolidated financial statements, detailing operational results, financial position, and cash flow activities Consolidated Statements of Operations Corteva reported Q1 2024 net sales of $4.49 billion, an 8% decrease, with net income attributable to Corteva at $419 million and diluted EPS at $0.53 Q1 2024 vs Q1 2023 Statement of Operations Highlights | Financial Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $4,492 | $4,884 | -8.0% | | Income from continuing operations | $376 | $607 | -38.1% | | Net income attributable to Corteva | $419 | $595 | -29.6% | | Diluted EPS from continuing operations | $0.53 | $0.84 | -36.9% | Consolidated Balance Sheets As of March 31, 2024, Corteva's total assets were $43.6 billion, a decrease from $45.5 billion year-over-year, with total equity declining to $25.0 billion Balance Sheet Summary (in millions) | Account | March 31, 2024 | Dec 31, 2023 | March 31, 2023 | | :--- | :--- | :--- | :--- | | Total Current Assets | $17,163 | $16,260 | $18,329 | | Total Assets | $43,625 | $42,996 | $45,500 | | Total Current Liabilities | $11,332 | $10,409 | $13,231 | | Total Liabilities | $18,617 | $17,717 | $19,661 | | Total Equity | $25,008 | $25,279 | $25,839 | Consolidated Statement of Cash Flows Q1 2024 saw a net cash outflow of $2.61 billion from operating activities, an improvement from Q1 2023, with investing activities using $270 million and financing providing $1.77 billion Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash used for operating activities - continuing | $(2,606) | $(3,302) | | Cash used for investing activities | $(270) | $(1,511) | | Cash provided by financing activities | $1,766 | $3,274 | | Increase (decrease) in cash | $(1,144) | $(1,550) | Segment and Geographic Performance This section analyzes Corteva's net sales performance across its Seed and Crop Protection segments and various geographic regions Segment Net Sales Q1 2024 Seed segment net sales grew 2% to $2.75 billion, while Crop Protection net sales decreased 20% to $1.74 billion Q1 Net Sales by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Seed | $2,751 | $2,695 | +2.1% | | Crop Protection | $1,741 | $2,189 | -20.5% | Q1 Seed Net Sales by Product (in millions) | Product | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Corn | $2,087 | $1,979 | | Soybean | $292 | $269 | | Other oilseeds | $245 | $301 | Q1 Crop Protection Net Sales by Product (in millions) | Product | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Herbicides | $886 | $1,242 | | Insecticides | $373 | $409 | | Fungicides | $295 | $359 | Geographic Net Sales Q1 2024 Seed sales saw 11% growth in North America and a 9% decline in EMEA, while Crop Protection sales decreased across all regions, notably 30% in North America Q1 2024 vs Q1 2023 Geographic Net Sales (in millions) | Region | Seed Sales (2024) | Seed Sales (2023) | Crop Protection Sales (2024) | Crop Protection Sales (2023) | | :--- | :--- | :--- | :--- | :--- | | North America | $1,471 | $1,323 | $616 | $879 | | EMEA | $918 | $1,012 | $670 | $801 | | Latin America | $271 | $259 | $244 | $293 | | Asia Pacific | $91 | $101 | $211 | $216 | Non-GAAP Financial Measures and Reconciliations This section provides reconciliations and analysis of Corteva's non-GAAP financial measures, including Operating EBITDA, Operating Earnings, and Free Cash Flow Overview of Non-GAAP Measures Q1 2024 Operating EBITDA was $1.034 billion, down from $1.231 billion in Q1 2023, with Seed segment EBITDA increasing and Crop Protection decreasing Q1 Operating EBITDA by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Seed | $748 | $652 | | Crop Protection | $310 | $603 | | Corporate Expenses | $(24) | $(24) | | Total Operating EBITDA (Non-GAAP) | $1,034 | $1,231 | Reconciliation of GAAP Income to Operating EBITDA (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Income from continuing operations before taxes (GAAP) | $482 | $776 | | Adjustments (Depreciation, Interest, etc.) | $552 | $455 | | Operating EBITDA (Non-GAAP) | $1,034 | $1,231 | Analysis of Sales Changes (Organic vs. GAAP) Q1 2024 total organic sales decreased 6% due to volume declines, while Seed organic sales grew 5% and Crop Protection organic sales fell 21% Q1 2024 vs Q1 2023 Percent Change in Sales | Segment | Net Sales Change (GAAP) | Organic Change (Non-GAAP) | Price & Product Mix | Volume | Currency | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Company | -8% | -6% | 3% | -9% | -2% | | Seed | 2% | 5% | 6% | -1% | -2% | | Crop Protection | -20% | -21% | -3% | -18% | -1% | Q1 2024 vs Q1 2023 Percent Change in Seed Sales by Product Line | Product Line | Organic Change (Non-GAAP) | Price & Product Mix | Volume | | :--- | :--- | :--- | :--- | | Corn | 8% | 7% | 1% | | Soybeans | 9% | 2% | 7% | | Other oilseeds | -3% | 10% | -13% | Q1 2024 vs Q1 2023 Percent Change in Crop Protection Sales by Product Line | Product Line | Organic Change (Non-GAAP) | Price & Product Mix | Volume | | :--- | :--- | :--- | :--- | | Herbicides | -29% | -4% | -25% | | Insecticides | -4% | 1% | -5% | | Fungicides | -16% | -1% | -15% | Significant Items Q1 2024 significant pre-tax charges totaled $127 million, up from $83 million in Q1 2023, primarily due to restructuring and Lorsban® settlement expenses Q1 Significant Items (Pre-tax, in millions) | Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Restructuring and asset related charges, net | $(75) | $(33) | | Estimated settlement expense (Lorsban®) | $(54) | $(49) | | Acquisition-related costs | $(2) | $(19) | | Total significant items | $(127) | $(83) | - Q1 2024 restructuring charges of $(75) million primarily relate to the Crop Protection Operations Strategy Restructuring Program and accelerated royalty amortization for Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® traits[26] - Acquisition-related costs in both periods are associated with the integration of Stoller and Symborg[3] Reconciliation of Operating Earnings and EPS Q1 2024 Operating Earnings (Non-GAAP) were $625 million or $0.89 per share, a decrease from $833 million or $1.16 per share in Q1 2023 Reconciliation of GAAP Net Income to Non-GAAP Operating Earnings (in millions) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income attributable to Corteva (GAAP) | $372 | $603 | | Less: Non-operating benefits (costs), after tax | $(40) | $(33) | | Less: Amortization of intangibles (existing as of Separation), after tax | $(117) | $(118) | | Less: Significant items charge, after tax | $(95) | $(68) | | Operating Earnings (Non-GAAP) | $625 | $833 | Reconciliation of GAAP EPS to Non-GAAP Operating EPS | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | EPS (diluted) (GAAP) | $0.53 | $0.84 | | Adjustments (per share) | $0.36 | $0.32 | | Operating EPS (Non-GAAP) | $0.89 | $1.16 | Reconciliation of Operating EBITDA to Operating Earnings Per Share This section details the Q1 2024 conversion from $1.034 billion Operating EBITDA to $625 million Operating Earnings and $0.89 Operating EPS after various adjustments Q1 2024 Reconciliation from Operating EBITDA to Operating EPS (in millions, except per share) | Description | Amount | | :--- | :--- | | Operating EBITDA (Non-GAAP) | $1,034 | | Depreciation & Amortization (post Separation) | $(153) | | Net Interest | $(6) | | Provision for income taxes (Non-GAAP) | $(194) | | Exchange losses, after tax | $(52) | | Net income attributable to non-controlling interests | $(4) | | Operating Earnings (Loss) (Non-GAAP) | $625 | | Diluted Shares (in millions) | 702.8 | | Operating Earnings (Loss) Per Share (Non-GAAP) | $0.89 | Reconciliation of Income Tax Rate Q1 2024 GAAP effective income tax rate was 22.0%, with the Non-GAAP base income tax rate at 22.1%, consistent with the prior year Q1 Income Tax Rate Reconciliation | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Effective income tax rate (GAAP) | 22.0% | 21.8% | | Adjustments for significant items, etc. | 0.9% | 0.0% | | Exchange gains (losses), net effect | (0.8)% | 0.4% | | Base income tax rate (Non-GAAP) | 22.1% | 22.1% | - The Base income tax rate is defined as the effective tax rate excluding the effects of exchange gains/losses, significant items, amortization of certain intangibles, mark-to-market adjustments, and non-operating costs[10] Exchange Gains (Losses) Q1 2024 saw a net after-tax exchange loss of $52 million, primarily due to a $65 million loss from the hedging program, exceeding the $25 million loss in Q1 2023 Q1 Exchange Gains (Losses) Summary (Net after tax, in millions) | Component | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Subsidiary Monetary Position Gain (Loss) | $13 | $(21) | | Hedging Program Gain (Loss) | $(65) | $(4) | | Total Net after tax exchange gains (losses) | $(52) | $(25) | Free Cash Flow Corteva's Free Cash Flow for the twelve months ended December 31, 2023, was $1.214 billion, with forward-looking guidance set between $1.5 billion and $2.0 billion Free Cash Flow Calculation (in millions) | Description | TTM Ended Dec 31, 2023 | | :--- | :--- | | Cash from operating activities (GAAP) | $1,809 | | Less: Capital expenditures | $(595) | | Free Cash Flow (Non-GAAP) | $1,214 | Forward-Looking Free Cash Flow Guidance (in millions) | Description | Low End | High End | | :--- | :--- | :--- | | Cash from operating activities (GAAP) | $2,130 | $2,630 | | Less: Capital expenditures | $(630) | $(630) | | Free Cash Flow (Non-GAAP) | $1,500 | $2,000 |