Corteva (CTVA) 1 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the Corteva Fourth Quarter 2023 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kim Booth. Please go ahead.

Good morning, and welcome to Corteva's Fourth Quarter and Full Year 2023 Earnings Conference Call.

will Dave by and Anderson, Officer. today Executive Magro, Chief remarks and Officer; Executive prepared be Chuck led Chief Financial Our Vice President

Tim will join Unit; Q&A session. Seed Vice Additionally, Crop the Vice King, President, unit, Robert Executive Business business Protection Executive Glenn, and President,

during webcast. through Investor have of Relations We remarks the presentation the are which Corteva to slides call, prepared and link section our to posted our website supplement this on the

make forward-looking the will various which are are During on about we this uncertainties. and to statements, our expectations are future. based call, risks and subject statements These assumptions current expectations that

on materially forward-looking uncertainties, do in the this Our could differ any actual our and these Risk Factors these including section statements results statements. filed We limited due SEC. to of with not the duty update risks discussed call to but reports not and from those any undertake to,

making Reconciliations call website. note references to in press Please we'll schedules, Relations Chuck. non-GAAP release deck be supplemental summary my available and Investor the to along our pleasure slide measures of financial our on found earnings financial related now in the can certain to our non-GAAP with It's today's turn presentation, be measures. over

today, XXXX. market path look XXXX the closer thanks solid several of with takeaways key Thanks, your Kim. share an our by and for to I'd what's overview a are including There Good like an morning, creation on performance I ahead at fundamentals, for value our you XXXX hope us. with to joining start. everyone, and incremental year is great to update off a

value operational last more effectiveness and our validates At launches. the And creation new and our key than royalty we mix, of neutrality, year, say XXXX levers improvements. technology we would a company. XXX of that I product simplification, portfolio strategy core, are First, product its performance our had

our or hybrids Reklemel, XXX concepts products beneficial being characteristics. XXX trade the launched latter selective introduced of kind, registration XX we new stack alone, also varieties, delivered and new or and actives, and Protection, has product that about X Seed nematicide soil its Adavelt the In team Crop and new new In X first new approvals.

value The strategic last years and we our and we operational entered other implemented positioned in and over actions every customers stakeholders. outcome made are of deliver confident dollar demonstrates solid this X of earnings. more our the into in significant well and the sales to have converting progress With the cash to XXXX ability momentum,

overall must oilseeds being and challenges As technology. yield farmers for 'XX-'XX ag biofuels. Large global we demand crop look year ahead, to is the crop fundamentals face new the and for record disease, hit with grain, record corn despite America, production to is North a remain In testament constructive. importance and related met the that to a weather productivity expected of ag production

but Commodity modest production. XXXX pace from to remain from demand exception the to in area have as global grown, to use their is increase shift with influencing to with Global the a stress stocks peaks be elevated prices decisions. keep could planting corn and Brazil in U.S. crop declined forecasted with have crop weather soybeans. as continues

breakthrough seeds including has though demand not for from changed innovation farm technology, down and that In maximize which, yields turn, is boost above farmer its peak. historical income addition, XXXX average, farmer U.S. the in remains revenue. What

impact destocking market challenging the is as crop protection on strong, through and a that recovers in we refer the on-farm industry remaining still demand would abrupt going it what rebalance to the as overall With a from XXXX. had

confidence signs continue second expect to of year. enter what in XXXX, crop seeing of half the we first half like should as us we're the throughout more look the we of market this protection gives normalize to this improvement, While which

expect the be on with XXXX, back continued for On product full Corteva applied in points operating into sync. going X% XXX into to expansion. is get we imbalance year growth Once the between we results what farm and basis channel to of XXXX, margin the versus deliver EBITDA being

system, Our it business, technology sales being in States, achieving reached EX outstanding XXXX, herbicide market $X.X reached in Seed selling status well-supplied billion including in United XX% had an soybean Enlist particular, year offerings The market. where the of #X penetration. the in soybeans with Enlist growing a in our the

dividends and $X.X our at farmer innovative billion while Our and about year healthy well year sales full XXXX at North in approximately share $X.X the business and $X.X coming and our strong income for top seed levels steady billion capital bottom product our line had year, America; in via delivering about Between for full for costs shareholders cash Biologicals repurchases as technology, both as also flow to discipline, the of held working We free the estimate, demand in previous new returned approximately year-over-year billion exceeded acquisitions. funding $X.X growth. strong a billion.

year I'll over Turning with a Dave on level, of focus meaningful cash to And turn high in a just we should to to at expect but see heavy margin this a XXXX. minute generation. another expansion

EBITDA flow nearly another we deliver to reflects strong billion result, execute which cash generation X% course XXXX. and X% plan points. margin the $X year the of EBITDA basis line another share XXX foresee repurchases operating in incremental over at We midpoint, improvement to expect and growth As top a of of

effects key transition 'XX, expect strong year have Seed look another to on In a single-digit we Crop we continued technology to to expecting so of offsetting as spend farmers pricing to climate effective continue XXXX. pressures. also while the and as volume themes increasing yields growth let's from boost into Now In minutes XXXX few pressures, we're overall. low change sales growth but pest Protection,

linger the nearly although earnings. and in through certain first expect year see of double sales regions, we're the benefits by the the digits half And of to to increase double we expect beginning cost to We destocking of our Biological deflation. effects

as gains putting our recovery portfolio to new differentiated and operational will volume than than well as modest in, much-needed we offset launch seed more plan hybrids and a We in solutions from varieties, more believe headwinds. in Brazil hands. XXX All price expected improvements farmers'

yields Our to us Seed technologies pipeline startups the gene Promising technologies price-for-value the is like in customers. make more strategy. industry. editing innovation everyone our The accessible the pipeline to sustainable best advanced our to our in and from will continue long-standing incremental allow from large effective,

The off the XXXX have the framework strong in and continued to growth in expectation XX% Importantly, financial on innovation. the actions EBITDA from based us ability XX% EBITDA and for R&D XXXX Benefits market we our is give rate base XXXX. self-help invest future of adjusted margin current factors. to

driving overall to route The are been work the our to over cost strategy all portfolio, me let very strengthening call and With is much Differentiation that, This the to in market will has formula performance intact. for that is Corteva. turn value. our continue and working Dave.

welcome, Thanks, everyone, the and Chuck, call. to

and Slide for year. Let's the which quarter full X, start the financial provides results on

growth numbers year, the and we the from full see fourth EBITDA to the and can operating deliver margin continued for quarter expansion. both that You

with in Protection. with in prior earnings both and volume were offset were in quarter, Seed expectations. in gains and and and were largely Crop X% gains Seed Pacific. compared declines by sales by Asia North Organic touching Europe volume America our pricing down Seed Quickly on line year volume sales offset the America declines to Latin

and Europe. Latin America Protection, saw inventory destocking continued as expected, we both in Crop In

largely Importantly, behind did North we as see the gains to us. in volume destocking seems in be America region

for gains Turning year, EBITDA product the pricing versus in offset operational top of performance double-digit lower in of $X.X up year price exits. with X% all Total XXX over margin company organic the was translated X% operating an last X% year, volume. regions. prior full from Despite with points. were down nearly billion line strong includes by of pricing sales expansion This to growth, increase reduction impact a X% basis and seed pricing and the into year, gains

was by $X.X and from earnings working offset partial year from for a capital the on payable. billion accounts receivable, flow accounts inventory cash XX% primarily driven improvement, cash free year in improvement increased or free flow finally, with and The rate conversion XXXX And last was EBITDA. approximately

up Let's Slide with were driven by X X% the to to exit X% up now expected lower portfolio. nearly were versus every for review were were billion. pricing in Seed in across America price offset gains exit in the sales North up go down area Russia due continue from as volumes from and X% acres, Europe Russia XX% value. planting $X.X was to Organic area. price sales region we X% for by driven sales execution segment. increased Global seed Seed last represented The Seed to strong year. declines and corn Latin net in by headwind by volume delayed a planted lower business. America, corn planted Gains to and the on corn

was down gains Organic with by up by sales net pricing pricing driven down Protection approximately X% volume. last to sales Protection X%, were were compared Crop to billion. year Crop $X.X offset more Protection $XXX dynamics X% XX% channel by from Crop and exits. volumes million XX% well than destocking or products. new for as headwind down market demand impacted more the were year, Brazil as impact for than

and Portfolio $XXX that, revenue, EBITDA which approximately go Other. With X Finally, a to the million Biologicals performance. for let's full added summary reflected in acquisitions Slide is year operating of of

productivity unfavorable Crop cost $XXX X% declines operating and $XXX coupled were commodity approximately offset year, net raw materials royalties, with million more protection prior seed to headwinds. impact on Pricing and improvement and volume year. versus and increased to related billion. as inflation was input crop $X.X of approximately cost up actions well yield higher costs costs. The as in the cost gains, than headwinds million Protection For currency costs in EBITDA about

Importantly, of impact lower we're the see starting input costs. to

to During for SG&A improvement million and Seed full roughly spend acquisitions. year of Crop Protection expense transitioned other the the raw including $XXX half year, approximately by from was productivity material million low net year, costs cost deflation. $XXX single-digit Market-driven SG&A the of million mitigated Biologicals versus royalty the flat of and in $XXX prior were second savings. in

incentive the year disciplined despite prior year-over-year inflation. exclude we nearly spending, down SG&A X% was versus acquisitions, you lower accruals as If coupled with comp maintain

the #X. discussion Slide 'XX a to on on transition now guidance Let's for

We expect and by 'XX. both driven exits in billion by will product Volume be of pricing at billion, $XXX growth range Crop volume and in technology. new sales muted be midpoint, of million Protection net demand differentiated and representing in for X% $XX.X Seed the growth and approximately seed to $XX.X growth the on

to expected Operating EBITDA year and the than also $X.X at midpoint. over billion, or cost actions improve range at of and midpoint. product price and is productivity expected billion to with prior $X.X the deflation mix, points improvement XX to be Margin the more in translating X% is basis

of in higher lower expected and expense the tax $X.XX earnings Operating share, and EPS increase higher growth is count, share a per partially by $X.XX an interest at the be X% offset midpoint, of and which to reflects net range rate. average effective

expect offset and of operations by midpoint, it higher that basis. cash cash to earnings EBITDA billion, of rate was from cash the in utilize continuing the higher to the and capital At a revised be We and net roughly range flow to a billion free translates cash flow XX%. to Note free interest taxes. $X partially with flow working cash free $X.X improvements on conversion

in operating $X.X at the Turning ongoing be to XXXX. given pricing XXXX Crop XX, single-digit flat bridge approximately modestly in with $X.X company Total to Brazil, to up billion to in for market Protection pricing for Slide destocking, Seed the see offset low and is in midpoint to declines global dynamics. can pricing XXXX you billion XXXX by particularly EBITDA be in from expected

Crop gains gains Safrinha volume Importantly, and by Seed soybean bond for expect we are the driven planted in season. U.S. Seed Protection. area expected do in increased acres Brazil's in 'XX/'XX both

Latin growth driven America expect by and by products. global new mid-single-digit volume and demand In Crop XXXX, in led Protection, differentiated for we

to expected driving is revenue. up New incremental single Crop digits, Protection volume high be product organic

capacity high Additionally, from expect expansion we benefit franchise. Spinosyns Spinosyns growth as the the from we'll single-digit

Enlist costs. inflation, crop improvement of $XXX be are Productivity Crop cost single-digit see cost in penetration. in combined and of in significant deflation both million will expected high low approximately expect expense of in driven expense, $XXX actions to raw we Protection material input million input to by in Seed protection royalty benefits. our levels after cost benefits XXXX step path and years with increased with deflation, royalty add royalty and X another to out-licensing net income both EX And neutrality with

continue spend We compensation by increased SG&A We'll sales. now bad X% accruals. with also be expect and of expected in is investment the an to debt which in future invest increase R&D, in XXXX, approximately driven to in normalized

And add finally, with of the approximately Biologicals franchise improved is margins EBITDA operating in million expected $XX XXXX. to

XX% of EBITDA the Regarding sales over the timing and first in of be year. half to earnings and delivered of expecting sales XXXX, roughly of we're XX% the in

timing year of primarily see Crop quarters due difference the also XXXX. between quarter of the first versus We to X strength prior a Protection expect to in first the

You'll first channel recall that inventory quarter prior significant Crop of to Protection's was XXXX destocking. impact the

and we're Seed, normal delivery a between in the could on significantly assuming quarter weather Northern pattern which shift conditions. first For Hemisphere, second depending

earnings Chuck in and and financial XXXX of let's guidance in as framework based Slide continued for to and expectation said, the expansion our in mind, 'XX both actual the 'XX. drivers results XXXX we've for on growth XX With review key and 'XX 'XX earnings And to adjusted XXXX. go margin growth the

we XXXX, million an in versus XXXX. Now delivered incremental in EBITDA $XXX

was the and Given dynamics clearly this no in market feat our differentiates from small us peers. XXXX,

generate to in performance value double-digit 'XX. low XXXX, We've million about XX% strategy XXXX to of the drivers approximate EBITDA expect and annual margin compound growth continue. price translates $X.X plan this we Seed, within strategy of and a rate our control. between of growth our of anticipated demonstrated in EBITDA billion our for $XXX are an to and of have by additional 'XX which number A We

strategy another meaningfully benefits proprietary out-licensing greater our than more decade. see our we add to Our and 'XX. from the in both $XXX in next migrate to What's more royalty is grow million expect exciting 'XX own XXXX and as going $XXX alone million in benefits per that to year is we technology in a our delivered of portfolio starting even business we're that portion neutrality and to

industry Protection rebalance time. in the The some Crop will take

differentiation The expect XXXX, the to our industry. The will be Spinosyns by portfolio, solid. our of the elements will to continue severe market but at portions our in new farm underlying together with outpace from protect competition, in Biologicals of differentiated franchise We growth most franchise, products, and of its XXXX. achieved are also largely the the and it applications remains Protection demand Crop which business pricing portions including our gate non-differentiated

and and delivered plan million than anticipate cost the to grow deflation or million into net an $XXX both per across year improved XXXX. the we royalty and And include more combined in actions productivity that Now business. will of XXXX benefit XXXX this does is our XXXX, we not $XXX deliver another additional in

in Importantly, we'll more future also R&D invest to and continue our innovation.

drive base of and for XX With assumptions setup what that, to as the let's go well the the range. Slide to high could in XXXX included the transition and end and the EBITDA as low case to

we 'XX, by pricing, advantage yield driven technology. demand for low and single both 'XX in expect seed Now digit

assumptions in growth much the market business in Protection is biggest imbalance. see the current One how given variables we'll Crop the our of

market. remains in significant demand on-farm a not consistent, While rebound relatively we're assuming the

New the and products, in would Protection of the much differentiated of XXXX in Crop XXXX, portfolio. Biologicals, X/X differentiation as Crop drive we including Protection move and towards growth

flat. relatively to deflation in Seed Protection. cost to Crop expect Seed deflation XXXX, input both modest we benefit costs from By Protection with Crop more see expect we and cost In see XXXX, in

R&D our due sales. debt of Our investment as as of include target we compensation as and assumptions increased normalization of SG&A increased to reach accruals well bad in X%

which margins and to set out beyond Seed and to ability both we Together, Protection. grow a in in assumptions, and confidence gives us XXXX earnings our balanced Crop of have

with summarize So go XX to let's that, and key Slide the takeaways.

XXX the First, full to importantly, by XXXX Self-help strength business And basis continue XXXX into performance going roughly grow margin by Seed line by and year the for with able into operating in we're operating helped points. was levers EBITDA to and improve of this expectations, led is XXXX. EBITDA X%.

next give And bottom that and the is shared of today guidance finally, our XXXX earnings this continue reflects much and in line to flexibility continued margin for in which with for The returning we is setup to growth, balance year and control. and sheet year that our of our our strength supports the shareholders. us to track record financial grow significant cash ability confidence you

And Kim. with it turn that, let me to back over

Thank you, Dave.

statements like Now please provide cautions your to measures to following our that let's remind the apply Q&A. on on questions. non-GAAP move both and I prepared forward-looking would Q&A our Operator, instructions. to remarks and the you

from go Morgan first Vincent And to we'll Stanley. Andrews [Operator Instructions]

I business. Can ask Crop Protection the on

If and expecting of where markets you talk sort perspective is What markets are following you price all the you in And have in completed be or manner. end to can bad ongoing. a in you finished? price XXXX, How of perspective? to then the differentiate about you are performing from volume From likewise, versus those you on the volume volume think how could versus a side the just talk equation, markets be is the markets still about destocking about could destocking it? where closer expecting of may at that price it's volume

market, Vincent, quickly as about then and and the try you Robert the talk Yes. do I'll we'll I'll overview some is Chuck. to can we specifics What this do give of in it's can. the as

year what Look, is are the CP. we a was speaking, CP broadly imbalanced few only situation, we think year still they're this market, I'd but if global say in overall think about in year last pretty tough you a Where the that regions.

supply. say, is say, quite is is I largely normally now. And ample market the U.S., there is us would still the and I'd where behind Europe. But healthy. Brazil destocking functioning have And market in are we the So a pockets,

be look global we the When be And to is, globally stable it's and expect you see we situation that as 'XX early and look overall XXXX it really of down be single low price. that industry the seem in called then that -- most so globally. year, in for going at historical our growing, broad is Volumes digit. 'XX that you And though, I the CP. industry. the and of we we a more that out, rightly will think likely a and is first think, function you XXXX, look is about in then normalize Things half the believe tough stabilize look this to will second like half, this, then CP and as the should if statement fairly to

low will single growth So sizing base. digit, new And to XXXX. growth return be is a up normal we're off of that then how lower

sort and around do that's to specifically for at want just 'XX talk So look of first a you the markets? setup XX. Robert,

continue add Chuck that be being works in out, and as of everywhere We'll a that Brazil, were Price season market to on volume, 'XX-'XX take bit the our in a positioned to out still can competitive volume. to see markets with regions, some I pointed will world to product around about, of color you there. overall we as rest groups. of the destocking, talked by up see, how the be in how season that will are the watching needs growth Start specifically for where place. all we our as our large walk Yes. about but think little around you there with, of regions and and industry down reflect

you a look of up to differentiated XXXX, in we're at on were our that as you'll as much a and and price. headwind portfolio, the new have portfolio, very differentiated with was seen And market Biologicals. products or pricing our begin products new leverage X% able to But really in use

products, that new expect upward we volume Biologicals in next all going so see gains to are Spinosyns, those products, price over this and And the year.

full a be part our with coming the is our fruition Xx Biologicals, portfolio of at when the of up to on that there. uses, Specifically second and acquisition basis the look think integration year-over-year about in as of you year you the acquisitions Biologicals EBITDA going pricing the that, actually to the

areas we're looking things out for portfolio. X of great our of So those

we in of you we pull a And Yes, to to pricing, differentiated new then and earnings, Biologicals will price/volume but specific up work the that I portfolio continue through of value. like to strategy continue be said, good going year. always think through our of to this think to when follow price be about able pretty for position a the as a majority making nearly There's to it's our had we price competitive. we we're entire

go I'll Begleiter Deutsche Bank. David from to next

in growth versus 'XX in you're the million EBITDA but $XXX Chuck, $XXX Can 'XX in up midpoint million on accelerated 'XX, why expecting EBITDA? 'XX. guidance, 'XX you 'XX on your discuss and the of

situation, the me Seed start Dave some can also But very up we've stable of just very in CP the here. we've on-farm about remains technology and for the and market, demand looked Seed, very give well about you being market And but perspective at steady. healthy, for as talked way if thinking the sort top

can impact grow set then consider the is then to sort and CP when comments hit and you the of where that still again you've have And in that's really guide our the got in 'XX, the we've backdrop we just going stabilize industry in XXXX we you how CP to the market where we of of destocking believe we've take sort XXXX. So that's in start that business. made, some and impact that then global is reflective fact if the up and having

that And royalty it's bucket controlling then the royalties value seen creation, cost, it self-help, in expenses our we out-licensing sort improvement of there's it's is, productivity, we've controllables, it's this large call of growing. which and our it's

and between -- sort $XXX well, XXXX, in see and self-help was going somewhere XXXX of forward in management million million now $XXX manage approaching And into P&Ls, to how deflation about hedging going XXXX, in because number going controllables, But think it move now there's $XXX and deflation. of in in to you million. of one that If we're here that, we're of starting over big was our has the that -- again, we benefit and primarily Seed CP. risk XXXX. be business, to more we really through see as even get issues our that's some And is

So just are and of the through with to should it of the seeing hit. some of the And the P&L. accounting your specific do there some normalizations, Dave, has come then timing that question, rate some to deflation you

Yes.

our in I think other then compared of really 'XX of result, XXXX, assumption the merit related items just other to got those compensation won't And we've sort that in key this got we number when David, SG&A of where affect there's in us. incentive increase you assumed is as headwinds. you and thing, those a increments as got in terms lap to look XXXX some a headwinds same at particularly of known XXXX, We've also benefits we've lower we accrual, have and facing 'XX, discrete XXXX. had

the provides as Chuck that referenced. to in that controlling some So of addition the well controllables the lift

point last David. one maybe And here, Yes.

X 'XX, years, EBITDA. think the saw last a in about you less plan $XXX and 'XX, little for actually of and grew in 'XX, same a that more less little in XXXX. the about XXXX but Corteva we then That's million If by in 'XX

about right we've made, we should are feel comfort that. we here. adjustments adjust at not it gives the the very We least it, way, comfortable the 'XX look path that with path did -- at this it give we're the the that us margin. We're on and by we when on feeling So some

Markets. BMO Jackson next Capital go to Joel We'll from

operating go want to Slide which the back to bridge. XX, EBITDA XXXX is I

side, are bridge of about the showing So that the XXXX. any component looking your in costs, drivers, actually and the looking earnings growth we're right hand but the your controllables driving the and at cost bridge, is a tax [indiscernible] costs lot even net-net at not on talking

showing a got out higher to driving that royalties guess, and So growth, you've also all talking you're this not have Can lower but -- points paying in side. cost benefits, is bit? it's I level, high I to R&D. why put these the trying you together net-net SG&A programs, am all cost cost larger right-hand cost on seed explain

benefits, to let little overall manufacturing Joel. really, cost prior much I think, are really a between CP color. important as bit productivity But businesses. the going more It in into question. one, you response that well we gave a Yes. as got an get very It's really question, We've the through. good there. to We're contribution give really both the coming plays me Number

let's $XXX benefit, goodness, million call terms $XXX of another around probably, it net million So of of in royalties.

Now offsetting talking higher the just shows the the that, but volume, in some slide R&D. of reflected got up some I'm either lines, now cost the that walk, and is of just we've cost you're in self-help or price benefits on the of And piece the referencing. which

some And So and debt. SG&A, additional in SG&A. then $XXX million got We've over made again, merit million of R&D $XXX that is up of incentive bad accrual. comp

that normalized terms the the a million. other And EBITDA Robert against the believe That's significant we experience And know, debt. will of and business. items, the increase in including in you each backdrop then what Biologicals deliver in for we've begin of that's year terms SG&A XXXX. bad we the about accrual got with of As in of referenced $XX annualization

comprise we that And other lot of then the just tail. have things a

One is, will $XX prominently, shift Europe, expense about of and deployment those XXXX you the we're last America That America. from ERP is ERP which U.S. in million. our major That's recognize to would deployment, 'XX completed 'XX. which in now Having sector. in in capital with Latin in our Latin

why up, all add shows you what the optically it is. when it So line that's

self-help, referenced significant in We've up volume. you well. less. is will, I That of cost increase the and costs. got in significantly the importantly, But if outside and shows some some So becomes XXXX in that question, that headwinds earlier area, shows for up price as this

for In away fact, goes that increase XXXX.

the at from that's So helps. to that looking 'XX that I hope lift of part lift -- 'XX.

next Kevin go Research Vertical We'll McCarthy Partners. to from

to of the to raw could are X%. benefit in XXXX? question cost relief cost is million direct decline Maybe to for And the you're any your My about me more the for speak each that X% relates would input relief it in you Seed seems given in prices? Is Crop XXXX, then to you baking XXXX, it that helpful. material you commodity anticipating costs Protection, or side to of segment. on $XXX a Or in equation, maybe of flow fair? that through In be really

Kevin, sure.

we to Protection, Crop anticipated the the in going So on materials side. indicated, we're as direct benefit see

second In we're what for call and and spend experiencing really, terms opportunity the the the looking half at it, addressable in of year. of improvement this

kind think range XXXX. appropriate is single about for So be an I that to thinking of low digits,

On the delay P&L. at know, Chuck what shows market look have when the strategy said, or Seed hedging with that side, It's as as as you is versus the know, utilize. up commodity we have and commodity what associated in you you you in the spot costs you a

percentage is 'XX cost, in for important of cost, to grower terms occurs those actually So commodity XXXX, very that and activity that compensation related and in procurement of 'XX.

variables year-over-year The a sold goods currently it planned, the costs. a Seed But of haven't other on anticipate baked we business. lot as terms other accounting, change commodity -- guidance, the said, There's into meaningful the part our of don't is cost also of besides numbers of which influences for FIFO Seed in side. Chuck aren't the

to go Research. Fermium from Frank We'll Mitsch

Latin referenced there wondering terms had been? of And seeing as impact what on continue expecting CPC 'market overall Brazil the you dynamics' you're year, in assume on you in last thought in generic referring what early obviously, you call. with region, you're into conference focus competition. you of what part to which destocking update if that weather to just which to want the impact in could to then Obviously, I'm have staying had the particular? curious I America. might I'm that provide foreshadowed impacts, of you I an generic was in -- the also but kind in

you Frank, let Seed and I Tim add Robert in would yes, then so if right. give gives instructive to you anything then and look, level situation it think CP. But the me a you're high happening in that's has if be

probably It look was you macroeconomic is it the had got in, at all right? America in destocking planted of big -- call region a a stocking XXXX, pronounced impacted the then So and really, kind crop. I'll zero And Brazil phenomenon. challenges, for Latin -- has CPD was just if top But I'd weather is conditions We and the most us. certainly this perfect which severe storm, acreage on that down the that. And the hit with of slowed of pretty you've country. actually Safrinha diverse

we to time structural can direction. that over to see some trends is I'll I the changed. are turn about country some for an The take it right and now future. growth be parts to This to not We the Brazil, going that ag will But long-term Seed Tim CP, I the and in is do see positive, heading think, has market make opportunity we seed. in it sort in moving out. in comment there's that been the So talk

Thanks, Chuck, and Frank.

was across or I it that delayed resulting in kind places, would commodity some couple the a drought conditions variable So you on significant that was soy the yes, weather markets the with into back heading that really from stocks in describe you key backdrop further the lack some South. was in Safrinha start into early as, of go that Brazil. And in and the cases, as carryover the moisture in excessive I or big planting decline to the last the season the when went yields of the season. we highly a marketplace the rapid then moisture of the, prices you high mean, what season, And saw pretty result of

share it really later up crop with follow planting that a impacts what planting a to the window. an pushing the window significant ideal doing into the And falls of that ability soy into corn was ended a of farmer up

team and going partners the that peg soybeans in major As we last planted the -- we or call how that a at spent lot channel about of said, in areas, XX% when you planted and not the of time point commercial to were growing And is frontline corn. time. discussions guess -- was best critical And and corn of much of somewhere traveling my the won't X across to sort marketplace following there. with in November, try crop months, in customers a over with talked planted. not at get that it, needed we for that that XX%, ideal lot were Safrinha excuse around our me, certainly, at up window corn this from I'm to of I be feedback a point the

and are harvesting Brazil, corn was planted as the week, the double-digit we were being corn where terms it out. and But planting somewhere, where call sit of summer farmers has That season firsthand And planted. in Safrinha already saw the it, timing still the they corn. said, coming I here I that been right with reduction works the believe today, in and area last in be beans hectares both for we will that's a it

the Safrinha next the reasonable So as on of corn we're of the typical where the that our Chuck a a of be the think said, to price. reduced corn expectation lot 'XX in I the And we going order is, to back 'XX-'XX even as will and still more year. go is hectares second a there into see just next of that for half and for something year, of important being momentum with for crop target level support 'XX commodity planting something

Corn Brazil remains a still crop. growing. Demand in grain profitable is for

right being the And is seen year the that harvested agronomic that those And and were is not plant better soy so performing that thing very important. real we've to that from a is that corn. rotated last strong that's on other acres corn reason than from followed there's now corn

but a it Safrinha fundamentals is and the still really in strong, we're optimistic challenging Brazil. season So remain very

pass for I'll it over So to CP. Robert

little bit when destocking going little From a said. growth. XXXX, take to of going little it's due of the be better Biologicals the in through see products, view. reflect we we just to differentiated looking part to Chuck and at on get time. the first is overall, then expect a our unpack overall, Yes, single up adding work going to industry what's on there. Brazil, low last I more at bit products But fundamental Frank, bit of to there, further longer. to digits began We next to but of this need a what down this we think to back look or penetration primarily the Brazil modestly, new little year to will year, have in a It's

seen and overall there Specific Asia. It in is But further the stronger we've significant and capacity, global not and coming been degradation changes market, any Off-patent bit and America generic question out pressure of generics though, part in a any seen to Latin your there we've of generics this the market. the environment. in pricing competitive have pricing always little manufacturers. Production of around not either.

molecules a are of some coming However, big built our few none next in plants factor that are focusing been there on the have any years will which molecules. off-patent that are there, late of of that play

last the imports Brazil in to And we began pricing low half profits are In to that environment. see slow overall. generic of continue XXXX, struggling this the

this and year. we walk that we will be next expect there through year changes as there So some

begin and on What agronomic due But is next to that us a factors does think Being high-technology it we value, with strategy service yes, XXXX a differentiated good winning profit then products higher focuses input is strategy exasperated earlier. pressure, save at pricing things we're These in the that will those these position products 'XX into one think differentiate as is we is head in cost? excellent we competition. in look are areas. And in and pretty from still the the our and to the what higher areas on and service. combination. there macroeconomic to high-quality is bit alternatives environment this the best the Chuck our former that mentioned the farmers that to Specific Brazil little a the the

thank you. So

Steve Bank to next Byrne America. of go We'll from

for an you assume seed your $XXX out-licensing you point. for the million? within And of How And of much it North see do are that at risk a are competitive percent in ask your buckets million that, in-licensing. you there. view trade of on this net full and wanted America royalty potential Enlist order to And going both spring much in fee, I can with book just partition $XXX XXXX? fee soybeans Those you reduction how Seed actions? expecting is is increase of versus the into buckets? into Can pricing any that germplasm split as X

little shot at all I'll It's those. Steve. bit a on America here. take spend to of North -- right, Seed All a time we're going

-- closely since you commitments, on experiences seeing now, securing good I'd it. So kind I'd And proposals feel in mean, market customers, been say terms we order building technology. we're August our window, about and where very our that with past was of pattern and of live we've I mix of and where sits and timing terms change expectations, today. consistent say order the we book right X, working in not spend of we're touched August-December at any pattern in with the and

feels that there. And spot right a good like so

say and corn opening the soybeans from pricing, side the of XX are spots roughly terms I'd sit the as the on hooks there. the of But maybe belt. for we in corn marketplace. the a it's we're and In year, out days heart on always lot bit of competitive competitive battling window a I'd this today, here planting say than probably And question a more little

holding good proposition, plan. prices where Our value we about is understand our and our focused are staying and executing there. close team we sit on feel Customers the and

XX And around season going what's happen, in never the think I stability as spot price. a so know in call you But here. really until breaks to of, terms I said, positive the we're it, days

EX is today, EX soy terms Enlist where XXX visibility market the over there's other estimate into sit XX% is tracking order of market When and XX%. about about EX, position the again, see soybeans. best and our to right remember, in selling I'd And licensees full this at are that now don't as expected year. you to converted we We companies get we our have say

don't have but we XX% level so is confident. think perfect there, that I And visibility

things and as are surprises expected. no So tracking

this we're won't of majority payment In the of terms year, can I the of would say benefit split I soybeans. to. reduced that getting into royalties, don't royalty primarily this that know year I and X, bucket, be probably I'd in from try But if it

So that's primary of that as think the the -- bucket.

Chuck that the -- reduction and in 'XX in will from had royalties especially the earlier from we're maybe royalties than I paid. of said and is to going what benefit his think see comments, benefit as greater in royalties transition, where be beyond beginning

as significant pretty a a milestone So that we be significant will -- transition there.

I your So on all I think points there. touched

go from next Samuelson Goldman Adam to We'll Sachs.

little which fourth more Protection color I balance both think of free was in working normalization XXXX. between any work should your outlook, obviously, in as that we the through in how How the bit just quarter the to will a hoping inflection How cash increase? you Protection -- those capital well in production, there's X in kind just Crop cadence happening on divergent get outperformance do differences maybe kind businesses. flow the about the and very as Seed of the capital working trends trends Crop maybe call is -- would payables and because, year out

Dave. Sure, Adam. This is

U.S. we the income in had strong and liquidity. underscores particularly health as as in well XXXX, advanced in know, the terms their you of a by the as receivables We really of finish, farmer So benefited. way, payments, which, also

strength collections, round had really us numbers achieve $X.X that of which terms in we of So cash flow terms to for enabled billion in of XXXX.

inventories. Notably, terms capital. our change working though, going and mix XXXX accounts in you be net in payables same to with the of We For of XXXX, guide had the in and progress to cited of little Protection change particularly a the receivable use positive includes different. what for is continued reduced related Crop reason is the in the inventories were side significant terms managing was a just in the procurement,

conditions, we is capital very healthy a mix DSO the cash-to-credit -- and of to year-end. in collections theme in being, capital, modestly, terms We've we're in terms going that's being both essentially, in on at still continued is got a of the working of is XXXX. contribution receivables a year-over-year way. change, But shift And in the overall year-over-year up the assumed got, basis, working on in ratio go other of cash, change payables, but see market the basis. XXXX, the think go we've cash going and going that to moderation for For with from contributors again, overall benefit terms little some just of receivables to

terms XXXX. think that So XX% number to XX%, round giving XX% we're we're is like in near guide the number to I the excited EBITDA of is for you, be conversion but flow at conversion precise more cash

Yefremov go KeyBanc to Markets. We'll next Capital Aleksey form

over discussed the you fourth situation quarter, Last -- at changed Crop generic an influx Latin imports Has into America. of all Protection in quarter?

Yes.

through work down, So our elevated I say, think seen far and from includes imports quarter in they're and we XXXX, down, already. they're America. trending trending I'd the America so way was third fourth down then generics. Robert that that, broadly What quarter some slowing -- are entering generics the covered Latin what of is then we've in saw speaking, this as and speaking look, we generally they're since -- Latin into from imports

a what that's level So price a is And we of I'll we sustainable. need you moving we of profitable you're be is kind is and that I think rebalancing regions. happening, peak these it, that there what around we was seeing didn't saw that view think expect at into to exactly think we're a what call at, that here commented these when the there's happening is I products the world

not generics I But a we but exactly They that's a going role, of a will so slowdown. it's away. what They're primary And saw market. the not area. part -- serve this is counsel

technology lines fact, want our value where need to I entire portfolio agronomic and with because portfolio we decisions they're that think product add away willing move because for support what these we've is differentiated that's from to In farmers we strong that. feel made service pay to almost

your Brazil, But into imports question, slowdown seen a yes, to we've direct generics. answer in including

Josh from question last Spector our take we'll And UBS. with

shift a ask Just -- EBITDA corn one, a soy being your negative to I if a in could about as didn't you quick bridge. on from talk

share, in where should between a is shifting soy look that a neutral? at profitability is meaningful factor at? from soy of be that we the you're Enlist you Just What's higher looking acreage given and more sensitivity or the as a at corn and

take shot I'll at this. Josh, a

don't mean for us profitable always I secret in North that it's more soy yes, any think than is So I America. corn

what's first, changing first is This I think that anticipated this. shock. a isn't we

And on is part but And because difference today, think now. technology the there it baked for our it's great we're and isn't been. is other important -- I we've else's dependent not been quite as still the And still on planning it's had this, so right is difference, numbers into the somebody soybeans. a reason as

we much have X, been where X, profitable. relative more to is X years soy So ago would

shift quite difference is it in, within have difference we Enlist business. We would there EX the the it's factored there. but So significant still our to not had a to prior

remarks. I'll turn And Kim over for or you. closing Thank any to it back additional

that and safe concludes today's you joining in And and for for wonderful day. call. interest Corteva. We have you And a your Great. we thank hope