Q3 2021 Corteva Inc Earnings Call
Good day and welcome to the core to that.
Third quarter earnings call today's conference is being recorded.
At this time I would like to turn the.
Conference over to Jeff Rudolph Director of Investor Relations. Please go ahead.
Good morning, and welcome to courts, Avon's third quarter 2021 earnings conference call.
Prepared remarks today will begin with introductory remarks by Chuck Magro Cortez newly appointed Chief Executive Officer, followed by an overview of the quarter and year to date financials from David Anderson Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn Executive Vice President and Chief Commercial Officer, and Raj younger Daria Executive Vice President of business plan.
<unk> will join the Q&A session. We have prepared presentation slides to supplement our remarks during the call which are posted on the Investor Relations section of the courts have a website and through the link to our webcast.
During this call we will make forward looking statements, which are our expectations for where statements 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 the risk.
Factors section of our reports filed with the Securities and Exchange Commission, we do not undertake any duty to update any forward looking statements.
On our Investor Relations website, you can find our earnings press release and related schedules, along with our supplemental financial summary, slide deck, which is intended to supplement our prepared remarks for today's call. These items provide a reconciliation of differences between reported GAAP and non-GAAP financial measures and should not be considered a substitute to the measures of financial performance prepared in accordance.
GAAP. It is now my pleasure to turn the call over to <unk>, Chief Executive Officer, Chuck Magro.
Thanks, Jeff and thank you to all those joining us on the call and webcast today.
I'm honored to be speaking with you after having spent the last several days getting to know the team.
Before I provide some early perspective, let me first say, thank you to Jim Collins, who is guiding me through the transition over the next several weeks.
I've known Jim for a very long time and it is a privilege to build on the strong foundation. He laid for long term growth at Cordova.
With culture and innovation at its core.
Now I recognize it's only day four so Dave will walk you through the quarterly results and the full year outlook, but it's important for me to first share some thoughts on why I believe that this is an unparalleled opportunity to lead at Cortez.
Starting first with the strength of the franchise, which I believe is an industry leader in terms of balance and differentiation.
In my experience in this industry I always admired and respected healthcare Teva work, so closely with farmers to consistently provide best in class technology to drive value.
And further the breadth and depth of <unk> portfolio is impressive as it scale reaches all parts of the globe and a competitively advantaged way.
This is why I believe when combined with strong execution <unk> can be the industry leader for years to come.
Which brings me to my second point.
Operational performance this.
This quarter's results of tests to what this team has built that core Teva.
Commitment to operational excellence and efficiency has kept the company supply chains open in the midst of ongoing disruptions.
And a culture focused on delivering for customers and keeping each other safe.
Is kept the organization on track meeting its commitments.
This is another quarter of revenue and earnings growth, which are a direct result of the strong foundation. This team has built over the past two and a half years.
Over the past few days I've spent a lot of time listening to and learning from my team and I can already say this team is fully equipped to deliver on what we all know this company is capable of.
From the expertise of our commercial and operations teams to the deep capabilities of our R&D organization. It is abundantly clear to me that through the combination of the company's strong culture and organizational strengths.
And are well positioned to capitalize on the opportunities that lie ahead.
So to summarize tremendous assets operational performance and an excellent team are only a few things I am really excited about and what attracted me to this opportunity.
I understand your expectations and I am confident we will deliver we have the IP the commitment to operational excellence and the customer relationships necessary to deliver long term solutions to global issues.
While serving the best interest of our shareholders.
We will always continue to deliver innovative and productive solutions for farmers expand opportunities for our employees and build long term value for our shareholders all with sustainability as a priority.
And with that let me now turn it over to Dave who will take you through the results and the updates to our guidance.
Thanks Chuck.
Perhaps one of the core Teva team I'm going to say, we're all very excited to have joined us at this time.
Terrific.
Our position for the company and we've got tremendous value that we can deliver.
I want to welcome everybody also to the call, let's start on slide five which shows our financial results for the quarter and also year to date.
Starting on the left side of the chart you can see it was another solid three months of continued growth and margin improvement.
Compared to the prior year, we delivered 24% organic growth gains in both seed and crop protection led by Latin America, and North America.
In the quarter, we saw accelerated demand from customers, particularly in Latin America, which translated into an estimated $100 million in sales in the quarter that was previously forecasted in the fourth quarter.
Looking at earnings we delivered seasonal loss of 51 million of operating EBITDA in the quarter, which is an improvement of greater than $120 million compared to the prior year.
Turning to the year to date results organic sales were up 9% to just over $12 billion. The growth was led by continued demand for new products driving more than $330 million and growth from new crop protection products seed sales improved on increased planted area in you.
Soybeans and also strong demand for corn in Latin America.
EBITDA of $2 $31 billion year to date up 25% compared to the same period last year and year to date pricing, coupled with volume gains more than offset cost headwinds driving nearly 220 basis points of margin improvement compared to prior year now this is particularly.
Impressive given the challenges we're seeing in global supply chains, and the cost inflation, we continue to face and we believe it is a clear differentiator for Teva.
Let's go then to slide six with.
With more detail on our global sales growth here, you can see the balance and diversity of our global business in the results.
In North America organic sales were up 5% through the first three quarters.
<unk> sales benefited from increased planted area for both corn and soybeans as well as the continued penetration of enlist <unk> soybeans consistent with last quarter enlist E. Three represents about 35% of the U S. Soybean market in 2021 feedback from growers and perform.
To this point is quite positive.
Corn price was up 2%, while soybean prices were down 3% as we continue to see competitive pressure in that market.
North America crop protection delivered year to date organic sales of 10%.
Demand for new technologies, including enlist herbicides remained strong herbicide and fungicide growth were both up double digits price increased 3% through the third quarter on price execution in response to rising input cost, including raw materials freight and logistics.
<unk>.
In Europe, Middle East and Africa, we had strong organic sales growth of 7%, resulting from price execution and record sunflower seed volumes. This growth was muted by an approximate $80 million to $100 million sales impact from corn supply shortages in 'twenty one.
In crop protection, the portfolio of new and differentiated products remain in high demand, including technologies, such as <unk>, herbicide and <unk> fungicide, which enabled us to drive price volume and gain market share in Europe. Despite the impact of discontinued discontinued products.
In Latin America, we realized 27% organic sales growth was strong volumes and price gains driven by execution on our price for value strategy, coupled with increases to offset rising input costs.
Seed volumes grew 16% driven by market share gains in Brazil, Sabrina and earlier shipments for the Brazil summer season.
Fall protection volumes grew 18% on significant demand for new and differentiated technologies, such as ice class and Jim Vella insecticides.
In Asia Pacific, we delivered 7% organic sales growth compared to prior year with both volume and pricing gains seed volumes were down largely due to COVID-19 related demand impacts, particularly in southeast Asia, and India crop protection organic growth of 11% was led.
By continued demand for new products, including <unk> herbicide and also <unk> insecticide.
Let's move now to slide seven for a detailed review of our operating EBITDA performance through the third quarter.
Through the first nine months operating EBITDA grew more than $460 million to approximately $2 3 billion.
This was driven by strong organic growth with combined price and volume benefits of more than $600 million as we continue to benefit from new and differentiated products against a strong market backdrop, we recognized pricing gains in both segments and all regions during the period.
Mobile corn price was up 4% year to date, Germany, Australia, demonstrating the value that we bring to customers.
Sales of new crop protection products grew more than $330 million versus the prior year and price increased 4% for the segment, which helped to offset higher raw material and logistics costs.
With respect to increased cost with <unk>.
Recognized roughly $350 million of market driven cost headwinds year to date as well as $70 million of increased compensation cost and investment spend to support growth. This was partially offset by approximately $200 million and productivity initiatives, resulting in a net cost headwind.
Of $220 million through the first three quarters very.
Very importantly, disciplined execution, while managing through complex supply chain dynamics translated into more than 200 basis points improvement in operating EBITA margin through the first nine months of the year again, a clear differentiator.
Let's go down to slide eight where I would like to discuss the current state of the global supply chain.
Like other companies and obviously various industries, we continue to face supply chain challenges and cost inflation and to reiterate the theme we discussed at the end of the second quarter. We believe these challenges will continue through 2022.
We've seen the cost of some of our key raw materials and co formulas increased more than 20% in the past year driving expected overall cost inflation to low to mid single digits as a percent of our cost of sales.
In addition to longer shipping times, we've also experienced additional downtime from supply constraints.
Part due to the more than 60 force majeure is declared directly from suppliers or indirectly from other raw material suppliers.
Now to help offset the impact of inflated input costs, we're utilizing operational levers such as pricing and very focused productivity initiatives. As an example on October one we announced on average mid single digit price increases in the U S. While the majority of our crop protection products. This.
<unk> externally source glyphosate, where we expect our pricing will be up approximately $90 million for the full year now just for context glyphosate sales represent less than 5% of our total annual crop protection sales, but the inflation impact has been significant.
With this backdrop, it's impressive that we're achieving attractive performance measured by on time delivery to customer request via agility and flexibility that our teams are demonstrating has enabled us to capitalize on evolving market conditions, including increased demand for both seed and crop protection.
Products.
With that let's go to slide nine I'd like to provide the update on our full year 2021 outlook, we're raising our full year revenue guidance. We now expect reported net sales in the range of 15, five to $15 7 billion up 10% at the midpoint over 2020.
Well, we feel confident in this growth based on strong market fundamentals continued demand for new and differentiated products globally in both crop protection and seed segments.
And price execution in all regions, coupled with pricing for higher input costs.
No mostly as a result of market driven factors mentioned earlier, we're raising our estimate for full year cost by 100 million for the year, Peru predominantly in crop protection. We're now expecting a total increase of $475 million versus prior year. In addition to these headwinds we also.
<unk> increased SG&A and R&D costs of about $50 million, which includes spend for increased compensation as well as investment spend to support growth.
Importantly, we are reaffirming and firming the full year expectation to deliver operating EBITA in the range of two five to $2 6 billion for the year, an improvement of 22% over 2020 at the midpoint. This translates to approximately 150 basis points of margin expansion.
Spansion for the full year.
And lastly, we're now forecasting a base tax rate in the range of 18% to 20% coupled with a lower average share price count due to our share repurchase activity. We have increased our operating EPS guidance to a range of $2 five.
To $2 15.
Per share for the year.
Let's now let's go to slide 10 and focus on 2022.
As you can see on slide 10, we've given you our initial planning framework and you'll recall that we shared this with you last quarter. Its intended as a reminder of the key assumptions as we frame out the 'twenty two plan, including organic revenue growth.
<unk> pricing versus commodity costs.
Strong penetration of new products royalty cost improvement.
And continued cost inflation, partially offset by productivity initiatives.
<unk>. This is all with the backdrop of continued strong market outlook and solid grower economics, which will drive customer demand in 2022.
Turning to slide 11, aligning with our midterm EBITDA target range for 2022.
On the left of Slide 11, we've shown you at a high level. The bridge from our 2021 operating EBITDA guide to the EBITA range implied by your mid term targets.
Now, let's go to the right side and cover a few of these key points.
Market fundamentals remain positive and our early views are that U S corn and soy acres will be approximately $180 million in total.
The slight shift to soy based on relative economics at this time.
Outside of the U S market growth looks strong in markets like Brazil, where planted area is expected to increase 4% to 5%.
In terms of organic growth, we expect that the global seed portfolio will continue to deliver on our price for value strategy, where we expect 2022 pricing to be in excess of estimated seed cost headwinds from higher commodity prices.
Crop protection, new and differentiated products, including <unk>, and enlist herbicides and Isa class insecticide will be a primary driver in delivering above market in that segment.
Turning to our early assumptions on costs, we've increased our estimate of seed commodity price impacts and expect to see seed cost increases in the range of $250 million to $300 million, largely driven by North America and Latin America.
As I mentioned earlier, we expect seed pricing to outpace these costs in 2022.
In crop protection market, driven inflation will continue through 2022 and.
And we expect cost headwinds of at least $150 million. This.
This includes the impact of the sell through of inventory and continued cost inflation as a result of the supply chain conditions, we've already discussed.
It's too early to comment on when we think costs will level off however, we will be using operational levers such as pricing and productivity initiatives to mitigate cost headwinds.
This provides additional transparency into our preliminary planning for 'twenty, two and how that bridges to our mid term target EBITDA range put simply price and volume will be critical to earnings and margin growth against the backdrop of strong customer demand and also continued cost and.
Supply chain challenges, we will be providing more specifics during our fourth quarter earnings call in early February and communicating the full 'twenty two guidance at that time.
With that I'll now turn the call back over to Jeff.
Thanks, Dave now, let's move on to your questions I would like to remind you that our caution on forward looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A operator, please provide the Q&A instructions.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. We ask that you. Please limit yourself to one question.
Again press Star one to ask a question.
We will take our first question from Vincent Andrews with Morgan Stanley.
Thank you and good morning, everyone nice to chat with you again Chuck.
So I'm just curious.
Chuck you know you have a very unique vantage point on this coming from coming from nutrient and obviously being one of the largest AG retailers and you competed with core Teva on the seed side of the equation.
You had loveland and you're competing with everybody on your proprietary products over there. So you highlighted everything that you thought.
The strengths of the company, but what do you come into this with from the outside is it prior competitor.
That there are some things that you need to firm up or some things that could be done a bit better it differently or more some blind spots are that you have that unique vantage point on and you can come into the organization and really hit the ground running with.
Yes. Thanks for the question Vincent and it's good to talk to you again. So first of all what I'd say is I'm really excited to be joining such a great company and an awesome management team.
You are right. So I know car Teva I know Curt Teva, because they were a top tier supplier to to nutrient.
And what I'd say to you though is in the last couple of days I've spent time with the board of directors a lot of time with my team and I've seen some of the operations already in just a short period of time and certainly everything that I've seen it's exceeding my expectations. So my early impressions are extremely positive.
I've had a good look at some of the elements of our technology pipeline obviously.
I am able to see it from a unique vantage point now so I had a peek under the Hood and I will say that there is a growth engine here.
A very impressive growth engine.
The manufacturing footprint.
When I look at it.
Probably the last two quarters have been the hardest in our industry in many many years and our supply chain is holding up with quite quite a bit of resiliency and thats because of the diversity that I've certainly seen.
There'll be focus areas of course that I will start to talk to the team about.
But it is only day four for me so I just wanted to say that.
I am excited to be here and some of the areas that im going to work with the team on just to give you a sort of a flavor of course, our customers are going to put them. First this company has already done that but we have a unique set of advantages and core competencies with our technology and our supply chain and everything we do we're going to put our customers first.
Second is sustainability climate change reduction of.
Acreage things that really drive yields and improve performance for farmers.
Or are things I think <unk> is uniquely positioned to us to really drive the sustainability agenda for agricultural farming around the world and then finally, we have some commitments out there we're going to deliver on those commitments. So the execution of the strategic plan will become a very top.
R&D.
And if you've heard me talk before I'm, a very big believer and controlling what we can control and that we really want to be known as the best operator in the industry.
Because I think that that really complements our technology platform. So hopefully that gives you a bit of color of some of the initial impressions and some of the things that <unk> was already talking about but will be of interest to me as well as I integrate myself with this wonderful team.
And we'll go to our next question from Joel Jackson with.
BMO capital markets.
Hey, Chuck Chuck.
What do you think the Chinese potash contract is going to fall out.
Kidding.
I'm just kidding I'm just kidding.
Obviously, you've moved from one part of the industry and the other part of the industry and you put out the slide deck on day three on the job fair enough.
No.
These are targets that could have had for some time, but 2020 you call them initial planning framework <unk> planning framework, what I want to call them.
Chuck you are probably going to be judged on whether you hit these numbers next year.
And so I have to believe you must have had a lot of comfort level that you can hit at least the midpoint of this guidance range with maybe some cushion above it to one or all of these numbers can you specifically if possible talk about that and your confidence that you can hit those numbers.
Sure Joe Nice to hear your voice again.
So the managed I have confidence in the management team I will tell you that right now.
Jim did reaffirm the outlook.
I was certainly involved in that.
And I will tell you that there is a lot of focus across the company throughout the world.
Those on the <unk>.
Outlook numbers.
And it is only day for us I'll, just remind you I will plan to dig in on the fundamental assumptions from the ground up obviously I haven't had time to do that but I will say a couple of things.
There is a lot of potential in this company there are a lot of catalysts and levers that are within the management team's control and that they are highly focused on which will drive long term value creation for shareholders.
Thing is look we believe that the agricultural backdrop is still going to be quite positive as we enter 2022. We've got good planted acreage we expect in corn and soybeans next year, we're going to see increased acreage in Brazil, I think that when we look at farmer economics are still very constructive your potash question I'm going to keep to the <unk>.
Syed.
But overall, we think that the backdrop for the AG markets are quite positive and then if you look at what <unk> can do within it and control in terms of price new products extension of its channel strategy. These are all things that the management team is highly focused on and when you add it all up that's.
Why we felt it was important to at least put the outlook numbers out there and just to reiterate I will look into it and a lot more detail, but I have confidence in this management team.
Our next question from P J <unk> with Citi.
Hi, This is Patrick Cunningham on for P. J.
Good morning, everyone.
Hi, you mentioned growth from Biologicals, and Chuck you briefly touched on that growth engine.
Mentioned 17, new launches in 'twenty, one and 'twenty two.
This business for you and where do you think it could go in.
Five years.
Yes, Hi, Patrick So look I'm going to have Raj I'll talk to that because it will give you. The details from my vantage point, obviously, we have some very unique technology in this area. It is a market that is growing it's becoming more and more important when you think about it through a sustainability lens, it's quite an interesting market, but it require.
<unk> unique science and technology to really deliver for customers and I think <unk> is going to be a real winner in this area, but maybe Rajan you can talk about the specifics sure Chuck and thank you for that question Patrick when we think about be opportunities in the biologics business. The plus message I want to leave with you is we see this as an Intel.
Lately with the rest of our crop protection business. So I think that the strength of our crop protection franchise, coupled with Vantiv mitigated with biologics is the reason for that optimism.
Our strategy I would say I will explain three prongs to it the first bucket in licensing very unique technology and our team has worked to get more than end of these signed up in the last 12 months.
Our optimism is coming from and these are global companies companies from Israel, France, Brazil, Spain to name a few so very strong in licensing. The second thing we are working on as we were in a very strong commercial organization, which I know you're familiar with it we are working to build capabilities within our commercial organization supply chain pharma.
Relation in packaging and last but not the least R&D to continue to supplement the in licensing technologies that we get and with Jeff on Board now we will continue to explore opportunities to bolt on acquisitions with the support from the board to see how we can further accelerate so really very exciting space for us we do have a very strong.
<unk> franchise in the natural products that are familiar with the spinoffs and franchise is already more than $800 million.
So we are familiar with the space.
And really looking forward to seeing how further launches will help us continue to accelerate the growth.
Well go to our next question from Kevin Mccarthy with vertical research partners.
Yes, good morning, and congratulations to you Chuck a couple of questions first on the financial side, you increased your free cash flow guidance by $300 million on the low end to $550 million.
Can you talk through.
The drivers of that presumably working capital played a role and I'd be interested to know how much you view as structural versus transitory and then secondly on the fundamental side. One of your competitors has been quite vocal about short stature corn be interested to hear your thoughts on that subject and whether that might.
<unk> play a role for <unk> in the future.
Hi, Kevin Yes, David can take the question on cash in and Rajan, then will follow up with short stature corn go ahead. Good yes. So.
Kevin Thanks, very much good morning so.
On the cash flow you recall and you may have referenced the previous cash from operations slide that we had our guide rather that we had of one two to $1. Six we're now at one seven to one nine so it reflects a couple of things I think number one as you know we have focused a lot on basic operational does.
<unk> around around cash and particularly on working capital. So there is a portion of this back to your structural that's really related to that and both.
Our receivables and also in our in our payables area. There's two areas, we've really been working on and deploying talent and the right disciplines in systems to support that so those are important contributors. We've also increased the amount of prepaid assumption just in terms of.
The liquidity that our customers have and just what we're seeing already in terms of cash coming in related to that so you could say that it's more more call. It temporary as opposed to structural we've also got some improvement in terms of net income with the lower tax rate that we've guided to.
And that's part of as you know our EPS.
Guidance increase also reflects a little bit more on the EPS front as you know reflects some a little bit lower share count compared to what we had in there previously given the strength of our share buyback program. So that's that's really it.
In nutshell.
So that's a distribution to your point in terms of structural and more more temporary but the structural part is very very important in terms of what we're going to be able to deliver we feel confident in that updated guide and that's obviously very supportive of our shareholder value objectives, and then the second part of that should I take that.
<unk>. Good morning, This is Raj and Kevin and thank you for your question on shock nature of when you think about the whole up breeding engine that Teva has as you know our Teva has the best Jim.
In the world the whole pool of germplasm that we have is something that we continue to build on innovation and the expenditure that we have on bleeding is the strongest investment that we make in our seed business. There is multiple tools that we have in the bleeding area.
Such are gone is definitely one of the areas that we are focused on but not limited to.
We have a very strong history of moving the yield improvements whether it's within a hospital to posting <unk> of not only getting the yield improvements, but also being extracting value from that so looking forward to sharing some more detail with you in some future innovation days, but short stature is on the list.
Things that we continue to innovate and we are looking forward to sharing the progress.
Go to our next question from David Begleiter with Deutsche Bank.
Good morning, and Chuck Congrats as well on the new role just two quick questions first Chuck what's your view on soybean pricing pressure, you're seeing in the companys strategy to deal with that pressure.
And maybe Dave just on the crop protection pricing, how sustainable are these prices, if and when raws to moderate or rollover.
You very much.
Yeah. Thanks, David So I've always been impressed with <unk>.
Customer with <unk> <unk> technology.
We're seeing very solid demand in corn and soybeans.
Really strong demand in line with our expectations for the analyst lineup and Tim can take the specifics around the pricing. So go ahead, Tim yes. Thanks, David good questions. So on the soybean market we've been.
We've been we've been talking about this for a number of years the markets have been competitive and they remain very competitive but I think when you look at where we're at we've had.
Good momentum and I will speak on our global standpoint from a seed standpoint, we've been able to.
Capture about 3% year to date globally on seeds and in some segments, even more like corn, we're worried about 4% globally year to date, we have launched our pricing and most of the northern hemisphere, including <unk>.
Soybeans and consistent with the past, we're taking a leadership position in terms of capturing value for a strong product performance and as always it's a strong it's a very competitive marketplace no doubt about it.
And we will we will we're going to continue to.
Execute against our strong value proposition, we have a strong disciplined organization in terms of managing our pricing process.
And the feedback on our products more in the middle of harvest still but feedback on product performance has been very good from a generic standpoint, and the demand for our <unk>.
Platform is extremely strong so we're we're feeling good about where we sit.
And as always we'll deal with the competition when you think about CP pricing and where we're at there we've been working hard to build a strong execution capability on pricing there as well and throughout the year, we've been very proactive.
To ensure that we're capturing value for our technology and also helping to mitigate.
The inflationary pressures that are out there and I would say that we've been I think on the on the leading edge from an industry standpoint, probably first mover.
As soon as the first quarter of this year in terms of repricing to try to manage to those escalating prices for commodity products like life is a very dynamic and we're going to continue to price that on an ongoing basis and really focus on ensuring that we offset all of the inflationary cost pressures.
But we are seeing there excluding glyphosate.
We've been able to capture about 3% year to date across our crop protection portfolio in some categories on our most differentiated products like the <unk> were up about 8% year to date, which is really outstanding and we're going to be proactive we're going to be strategically as we wrap up 2021.
And then as we set the stage for 2022.
<unk> already implemented pricing for most of the northern hemisphere in 2022 and again our expectation.
As Dave said earlier that we've implemented roughly mid single digit pricing across most of our portfolio.
In North America, and we're going to continue to focus on that continue to remain very disciplined and obviously.
As we as we work through and deal with more pressures.
We're going to continue to offset those as they come forward.
We will take our next question from Chris Parkinson with Mizuho.
Great. Thank you very much Chuck good to have you back.
As we head into 'twenty two you just hit a little bit on this but can you just further comment on regional CPC pricing.
Potential for incremental contributions for new product volume after a strong 21 performance. Thus far and then also just spin notion momentum. So just any regional color would be appreciated on this factors. Thank you so much.
Yes.
I'll jump in there and talk about that and obviously our markets are very local so when we talk about CP pricing I'll talk about it in an aggregate basis, and we reported on an aggregate basis, but we are pricing locally it's based off individual product formulations and what they are if it is in the marketplace.
And our teams are focused on ensuring that we are as locally competitive understanding that we've got these global headwinds that we're constantly dealing with so we are going to be dynamic.
Most of the world like I say isn't such a driver.
Price. So it is our differentiated products that are that our teams are focused on and when we talk about that 3% year to date price increase and when we talk about the mid single digit price increase that we've already implemented and in the northern hemisphere for for next year that is across our new and differentiated products as well so.
It's something that we're going to continue to focus on we will execute that locally knowing that we've got these global headwinds that we're dealing with in terms of the contribution from new products going forward. It's been a huge part of what's helped US continue to perform above market on the crop protection side than in most parts of the world and will be <unk>.
In 2022, so we've got a robust pipeline, we got great new products like <unk>, and <unk>, which are continuing to accelerate the growth pattern, we continue to get new registrations.
Literally every month, we're getting new registrations and so new products will be very important part of our 2022 plan.
Thank you our next question from.
Jeff Zekauskas with J P. Morgan.
Hi, Good morning, So quick for Jeff how are you.
Good thank you.
I will start with you can speak about the Comcast <unk> III B launch in.
Thank you.
<unk> ramp up of that might look like that gets probably very small.
The additional grilling season, when I was running if you look two or three years out.
Okay.
How many acres can thank you Mike.
And.
Secondly.
One way that can also like when my time, asking our cost price issue.
For 2022, so in general like the outlook that you have for 2022.
To me it doesn't look that strength I guess, you can have with that.
Three or four 5% price increases on sales.
$15 5 billion like that should offset.
Well all of your costs and so.
How do your EBITDA growth in 2022 shouldn't be that difficult. Despite all of the cost headwinds.
Do you see that.
Steve because I feel much more optimistic than I hear in your voice.
Yes.
So two parts to that do you want to do you want to go for sure I'll jump I'll jump real quickly on the Comcast. The question. So obviously, we were very excited in August when we were able to announce.
Announced that we received authorization from the European Union that enabled grain from <unk> three to be exported for food and feed you. So as a result, we have.
Have a limited launch of <unk> right now in Brazil farmers are able to plant product for the 2021 22 season. So.
It's the important step forward, what I would reinforce though it's really not a meaningful financial impact as we look at 'twenty, one or 'twenty two as we are working on ramping up production building out our lineup and ultimately we've got to go out there and gain customer support and drive adoption of the technology. So over time no doubt this technology is going.
To drive incremental growth for us.
It's going to greatly enhance our competitive position in the Latin American soybean market, which is which is important for us and we're excited to bring new choice to the marketplace and the marketplace is excited to have a new choice in terms of technology as well so.
And over time, we're also going to introduce this in other markets, such as Argentina, Paraguay and Uruguay. So it is something very important we have not sized what we see the adoption rate as at this point in time, but understand it's a limited launch and it really is about establishing that technology and gaining support from our customers.
Yes.
Good morning. This is Dave I'll take the second part of that related to 2022.
As you said and Chuck really.
<unk> articulated it well.
Really constructive set up when you look at 2022 with the backdrop of our markets.
And the strength of what we're bringing continue to bring to the market.
And as you said on price.
We continue to execute against our strategy of pricing.
John and Tim have spoken about that spoken to some of the specifics against specifically for 2022 related to seed, we expect global pricing to be accretive to earnings after the impact of.
Higher cost of goods sold and by the way again, just emphasize we've increased that seed cost of goods sold in the range of $250 million to $300 million now.
So that's very important.
And on crop we expect to continue the momentum we've seen in 2021, but very importantly, there's two really important things here number one is the market driven inflation and logistics costs again, I'm going to just underscore that we anticipate to be at least $150 million.
We've seen seen this progression over the course of 2021, obviously and we expect supply chain challenges to continue just to underscore that through 2022.
So.
These are some of what we see as sort of the balance against that constructive backdrop and the strength of what we're bringing to the marketplace.
And our ability to continue to drive if you will value value pricing in the marketplace. So we're going to get into those details as I said.
When we release, our fourth quarter earnings 2021, we will provide more specific guidance, but it's really it's really call. It down the middle there in terms of the set of positive and constructive setup, what we're bringing to the table and then this if you will inflation impacts that we're seeing in the various <unk>.
Dynamic nature of that so we appreciate your question and look forward to that update when we can provide more details.
We will take our next question from Steve Byrne with Bank of America.
Okay. Thank you.
Got a follow up for you Tim and that is a volunteer seed orders for 22 in the U S.
Where would you.
Physician than that right. Now are you are you close to having half of those orders in given where we are in the harvest.
And any trends that.
Can comment on whether there is a mix shift.
Oh in germplasm and traits.
Or perhaps even a mix shift in acreage between corn and soybeans.
Yes, I think Steve and where we're sitting right now is I would characterize this as kind of the middle part of our booking season in North America.
We go out and see customers call. It September one.
More or less is when when we begin to move in the marketplace in that booking period really extends through the end of the calendar year and so we will expect by that time to have.
The majority nearly all of our order position in place by the end of the year. So we're sort of in that middle position right now and I'd say that orders are tracking well with where we would expect to be right now for both corn and soybeans in terms of technology shifts.
If anything I would say that a lithium three demand on the pioneer side is is running a little bit stronger than maybe what we had originally planned as we came into the year in terms of the acre mix between corn and soy I think its very preliminary and way too early to make a call based off of our orders right now customers are going to go through the next several.
Months, and really have to figure out on an individual basis, what their what their crop mix will be and Dave made the comments about.
Where we see the market going into next year, roughly that 180 million planted acres between corn and soy in the U S.
Thats, there and right now when you look at the corn soy ratio, it's about $2 seven.
<unk> isn't so which is actually pretty neutral I would say on a year over year basis, but it feels like the economics are saying.
That we could trend a little bit more towards soybeans in terms of that 180, <unk> been last year can't calling off the order position I'd say the corn technology mix is consistent with what we would expect it to be farmers have been planting high technology feeds and continue to want to do that.
And really I'd say, where we sit today really supports what Chuck and David already talked about in terms of our set up for 'twenty two in terms of.
Good healthy markets and also very strong demand for our technologies.
We will take our next question from John Roberts with UBS.
Thank you two questions on pricing and welcome back Chuck.
On crop protection pricing it ranges from flat in Asia Pacific to 5% in Latin America does that basically track, where the new products are having the most impact or is there something else behind the range in pricing like the bundling bundling rebates would seats.
Yes.
John I'll take I'll take that in terms of the.
That element I would say Latin America, clearly has helped and has been benefiting from good strong healthy economy as well as that impact from new product technology. I don't think you can you can lay it only on that because actually we've got we've had some some some good technology adoption in Asia Pacific as well so good strong product introductions it really.
It comes down to.
Where we sit in those local markets and again, we are dealing in very competitive markets and actually on a year to day basis APAC is not flat theyre more like 2% year to date. So we do have some growth there as well so I would say, it's the markets themselves. It's the timing of when we would have executed the sale.
And of course that is very dynamic Latin America is certainly more weighted towards the second half of the year and we would have taken more pricing actions I would say is that to help mitigate.
Some of the inflationary pressures that we've seen as the year develop and been able to realize that from a latam standpoint, but.
I wouldn't I wouldn't say, it's only because of the product mix or or anything like that I think it could be timing and then that local competitive situation that youre facing in those markets.
And we'll go to our next question.
From Michael <unk> with Cleveland Research.
Yes, Hi, I was just wondering if you could give us an update in terms of urine west platform in terms of what percentage of your and lift sales next year going to come from your own germplasm and.
How broad.
I guess.
Your scope is going to be geographically, specifically wondering about the southern United States in.
That market lift next year as well.
Okay.
Thank you Michael I'll take that this is on <unk>.
Good job.
Plus info was just taking a step back the overall adoption of the enlist system really continues to meet our expectations. The demand at the grower level across the U S is very strong and as we think about.
<unk> jumped by them, we've got a very strong pipeline of new products coming through most of them are going to start hitting in 'twenty three 'twenty four but we are going to start making an impact in 2022. So the jump RASM is going to continue our growth within the <unk> jumped plasm as the trade gets integrated into our own portfolio.
That said I think the overall adoption is going to be higher than what we exited 2021 as you know we had expected about 30% and we grew more than 35 and looking at the 2022 setup. We continue to see that continuing to grow some of the challenges that we have had in the south with dicamba content.
Used to be a challenge, but when we look at the analyst HUD. Besides performance I think we continue to get encouraged that this out is lagging in terms of adoption, but as we continue to work on the different variety of how they're available and we thought about the dicamba challenges I'm very optimistic that we'll be able to make.
Some progress data tool the bigger issue in the south as I'm sure you're familiar Michael is more about the range.
<unk> capabilities that out of it and as we walk through some of those things I think we will get to where we need to relate it to that list adoption.
Go to our next question from Arun Vishwanathan with.
RBC capital markets.
And Arun Your line is open please check your mute button.
Due to no response, we'll take our next question from Frank Mitsch with Fermium research.
Yes, good morning, Congratulations Chuck good to speak with you again looking forward to seeing you on Monday.
You mentioned that your second priority, whereas on the sustainability front end during the quarter <unk> announced that they are they did a carbon capture initiatives <unk> joint venture with Indigo and I was wondering if.
Perhaps someone on the team can talk about what the what the financial ramifications of this or how does it fit into your current product offerings.
Any sort of initial feedback that you've received from this.
Yeah, Hi, Frank This is Roger and I would take that up.
It is related to the whole of value capture from a carbon perspective, but we are really excited about the relationship that we have gotten with indigo.
Of pilot program plan for getting the 100000 acres. This year and we are going to exceed that but as you think about sustainability and as we think about where the whole value proposition for pharma is going to go it's too early to say if this is what the price of carbon is going to be and that really is going to be one of the biggest assumptions that.
But the technology that <unk> bring from a digital standpoint, we intent to make sure that we are tracking the behaviors that the farmers are going to change the partnership with indigo brings capabilities that they have in terms of measuring the actual impact and get all this validated with the third party bodies in.
So we are really excited about the possibilities and creating more opportunities for our pharma customers to get the additional revenue.
Early to comment on what the financial impact of that is given the infancy of ATB asset.
And our last question will come from Alexia <unk> with Keybanc capital markets.
Hi, This is Paul <unk>, just one quick one what is your current outlook.
For seed royalties in 2022.
Yes, Hi, this is Roger I think up taking a step back to talk about our seed neutrality journey, we will continue to be on track for that.
Feed royalty reduction in 'twenty, two will be in the similar ballpark to what we have done in 2021, I'll give or take around $50 million, but the important thing is that all the elements in play for us to continue to work with that Odyssey introduction at a bit of the enlist up adoption that we have been talking about is a big part of.
So that's how we look at our royalties for 2022.
And that will conclude today's question and answer session. Mr. Rudolph at this time I'll turn the call back to you for any additional or closing remarks.
Great. Thank you. We appreciate everyone joining the call today and again. Thank you for your interest in core Teva have a great and safe day. Thank you.
This.
Today's call. Thank you for your participation you may now disconnect.
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