Q4 2021 Corteva Inc Earnings Call

Okay.

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Please standby we are about to begin.

Good day and welcome to the courthouse about fourth quarter 2021 earnings Conference call Today's conference is being recorded.

Speaker 1: Good day and welcome to the Corteva 4th quarter, 2021 earnings conference call. Today's conference is being recorded.

Speaker 1: At this time, I'd like to turn the conference over to Jeff Rudolph, Vice President of Investor Relations. Please go ahead, sir.

At this time I would like to turn the conference over to Jeff read off Vice President of Investor Relations. Please go ahead Sir.

Speaker 2: Our expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including but not limited to those discussed on this call and in the risk factor section of a reports file with the SEC. We do not undertake any duty to update any forward-looking statements.

Current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including but not limited to those discussed on this call and in the risk factors section of our reports filed with the SEC, we do not undertake any duty to update any forward looking statement.

Speaker 2: Please note in today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliation of the non-GAAP measures can be found in our earnings press release and related schedules, along with our supplemental financial summary slide deck, available on our investor relations website. It is now my pleasure.

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

It is now my pleasure to turn the call over to Chuck.

Thanks, Jeff Good morning, everyone and thank you for joining us on the call and webcast today.

Speaker 3: Thanks, Jeff. Good morning, everyone. And thank you for joining us on the call and webcast today.

For Teva executed well in 2021.

Speaker 3: Corteva executed well in 2021 as ag fundamentals drove strong customer demand.

AG fundamentals drove strong customer demand.

Speaker 3: For the full year, the company delivered double-digit sales and earnings growth, meaningful margin expansion, and improved free cash flow.

For the full year, the company delivered double digit sales and earnings growth meaningful margin expansion and improve free cash flow.

Speaker 3: This included impressive performance out of Latin America where the team delivered 27% organic growth on double-digit volume and price gain.

This included impressive performance out of Latin America, where the team delivered 27% organic growth on double digit volume and price gains.

Speaker 3: In addition, we continue to advance our technology pipeline, where in LISC E3 soybeans reach 35% market penetration in the US, and new product sales and crop protection reached over 1.4 billion in total, and increased to more than 40% over the prior year.

In addition, we continued to advance our technology pipeline.

We're enlist <unk> soybeans reached 35% market penetration in the U S and new product sales in crop protection reached over $1 4 billion in total an increase of more than 40% over the prior year.

Speaker 3: our capital deployment. We returned more than $1.3 billion to shareholders via dividends and share repurchases for the year.

Our capital deployment, we returned more than $1 $3 billion to shareholders via dividends and share repurchases for the year.

Speaker 3: This past year was certainly not without its challenges, including a dynamic operating environment that impacted most global industries and manifested as supply chain disruptions, raw material and labor shortages, and cost inflation.

This past year was certainly not without its challenges, including a dynamic operating environment that impacted most global industries and manifested as supply chain disruptions raw material and labor shortages and cost inflation.

Speaker 3: At the same time, the agricultural industry experienced significant demand for green and oil seeds that easily outpace supply, supporting crop prices and farmer income levels. Again, our teams executed very well in this environment.

At the same time, the agricultural industry experienced significant demand for grain and oilseeds that easily outpaced supply.

Supporting crop prices and farmer income levels again, our teams executed very well in this environment.

Speaker 3: Turning to the outlook, we enter 2022 from a position of strength and look to carry forward our execution with best-in-class technologies to deliver value for growers and quartets.

Turning to the outlook.

We entered 2022 from a position of strength and look to carry forward our execution with best in class technologies to deliver value for growers and core Teva.

Speaker 3: This is overlaid against the market backdrop where solid egg fundamentals will drive customer demand and challenges from supply chain disruptions and inflation will persist.

This is overlaid against a market backdrop, where solid AG fundamentals will drive customer demand and challenges from supply chain disruptions and inflation will persist.

Speaker 3: As a result, we expect to deliver 8% sales growth and between $2.8 and $3 billion in operating EBITDA for the year.

As a result, we expect to deliver 8% sales growth and between two eight and $3 billion and operating EBITDA for the year.

Speaker 3: Our priorities for 2022 are straightforward. We are going to focus on what we can control and execute on a balanced plan that is expected to deliver both growth and margin expansion.

Our priorities for 2022 are straightforward, we are going to focus on what we can control and execute on our balanced plan that is expected to deliver both growth and margin expansion. This.

Speaker 3: This includes continuing the penetration of new and differentiated products globally, capturing price, aligned with the value of our products created for our customers, and delivering on cost reduction initiatives.

This includes continuing the penetration of new and differentiated products globally.

Capturing price aligned with the value of our products created for our customers and delivering on cost reduction initiatives.

Speaker 3: In order to achieve our full performance potential, we have begun a fresh look at various ways to unlock value at a faster pace, including our global product portfolio and operational footprint. I look forward to sharing more of these reviews as we progress this work.

In order to achieve our full performance potential we have begun a fresh look at various ways to unlock value at a faster pace, including our global product portfolio and operational footprint.

Look forward to sharing more of these reviews as we progress this work.

Speaker 3: As I've shared with many of you already, I am very pleased with Cortevo's balance sheet and cashflow potential.

As I've shared with many of you already I am very pleased with <unk> balance sheet and cash flow potential.

Speaker 3: We have the financial strength to execute on a discipline capital allocation strategy, and we'll focus on funding high margin growth opportunities and returning capital to shareholders.

We have the financial strength to execute on a disciplined capital allocation strategy.

And we will focus on funding high margin growth opportunities and returning capital to shareholders.

Speaker 3: Now let's go to slides five, where I will provide a bit more detail on the market outlook and some of our assumptions for 2022. Similar to 2021, agricultural demand remains solid as economies around the globe continue to recover from COVID-related shutdown.

Now, let's go to slide five where I will provide a bit more detail on the market outlook and some of our assumptions for 2022.

Similar to 2021 agricultural demand remains solid as economies around the globe continue to recover from Covid related shutdowns.

Speaker 3: This is expected to drive record demand for grains and oil seeds in 2022, which we believe will keep commodity prices at the elevated levels we are seeing in the market today.

This is expected to drive record demand for grains and oilseeds in 2022, which we believe will keep commodity prices at the elevated levels. We are seeing in the market today.

Speaker 3: Over the medium to long term, we see constructive fundamentals continuing as possible new demand to support renewable fuels, such as bio-based diesel, will likely support healthy agricultural commodity price levels.

Over the medium to long term, we see constructive fundamentals continuing as possible new demand to support renewable fuels, such as bio based diesel will likely support healthy agricultural commodity price levels.

Speaker 3: Production will be vital in 2022 to balance supply and demand.

Production will be vital in 2022 to balance supply and demand for.

Speaker 3: For the US, planet areas expected to be 90 million acres for both corn and soybean.

For the U S planted area is expected to be 90 million acres for both corn and soybeans given.

Speaker 3: Given the current relative economics of commodity prices, our assumption reflects some shift from corn into soybean.

Given the current relative economics of commodity prices, our assumption reflects some shift from corn into soybeans as.

Speaker 3: As fertilizer prices remain high, and some growers may be inclined to rotate into beans.

As fertilizer prices remain high and some growers may be inclined to rotate into beans.

Speaker 3: This provides further support for systems like Enlist, where customer demand and industry-wide penetration remain strong, and we anticipate it will grow to at least 40% of total U.S. soybean acres in 2022.

This provides further support for systems like in lift where customer demand and industry wide penetration remains strong and we anticipate it will grow to at least 40% of total U S soybean acres in 2022.

Speaker 3: Current weather conditions in Latin America remain something we continue to monitor given the potential for risks around production and grower planting decisions.

Current weather conditions in Latin America remain something we continue to monitor given the potential for risks around production and grow our planting decisions that said, Brazil continues to be a very attractive market for growth and core Teva has an increasing market position, given our portfolio and pharma relationships.

Speaker 3: That said, Brazil continues to be a very attractive market for growth, and Corteva has an increasing market position given our portfolio and farmer relationship.

Speaker 3: planted area in Brazil for the 2022-2023 season is expected to increase mid-single digits and growers will remain focused on best-in-class technology in both seed and crop protection to drive yields and maximize profit in this market.

Planted area in Brazil for the 2022 2023 season is expected to increase mid single digits and growers. We remained focused on best in class technology in both seed and crop protection to drive yields and maximized profit in this market.

Speaker 3: Growers balance sheets and income levels are healthy and we believe that customers will look to prioritize technology for 2022 to maximize return even with higher input costs across their operations. And lastly, on inflation, we do expect raw material and labor costs to continue to increase in 2022.

Growers balance sheets and income levels are healthy and we believe that customers will look to prioritize technology for 2022 to maximize return even with higher input costs across their operations.

And lastly on inflation, we do expect raw material and labor cost to continue to increase in 2022.

However, we are confident that our global pricing execution will keep pace and more than offset inflation for this year.

Speaker 3: However, we are confident that our global pricing execution will keep pace and more than offset inflation for this year. And with that, let me turn it over to Dave to provide details on our full year 2021 performance and our guidance for 2022.

And with that let me turn it over to Dave to provide details on our full year 2021 performance and our guidance for 2022.

Speaker 4: Thanks, Chuck, and welcome, everyone, to the call. Let's start on slide six, which provides the financial summary for the fourth quarter and the full year.

Thanks, Chuck and welcome everyone to the call, let's start on slide six which provides the financial.

Summary for the fourth quarter and the full year.

Speaker 4: We ended the year with another solid quarter of continued growth.

We ended the year with another solid quarter of continued growth.

Speaker 4: Compared to prior year, organic sales in the quarter increased by 9% with gains in both segments. Global pricing was up 8% by continued focus on our price for value strategy with double digit pricing gains and seed led by Latin America. We delivered more than $260 million of operating EBITDA in the fourth quarter, an 11% increase from the same period last year.

Paired to prior year organic sales in the quarter increased by 9% with gains in both segments global pricing was up 8% by continued focus on our price for value strategy with double digit pricing gains in seed led by Latin America.

We delivered more than $260 million of operating EBITDA in the fourth quarter and 11% increase from the same period last year.

Speaker 4: For the full year 2021, organic sales were up 9% to $15.5 billion. Crop protection growth was led by continued demand for new products, which saw an increase of more than $450 million year over year. Seed sales improved on strong pricing execution, particularly in corn, which was up 5% globally, coupled with increased planted area in the U.S. and strong demand for corn in Latin America.

For the full year 2021 organic sales were up 9% to $15 5 billion crop protection growth was led by continued demand for new products, which saw an increase of more than $450 million year over year seed sales improved on strong pricing execution, particularly in corn, which was up <unk>.

5% globally, coupled with increased planted area in the U S and strong demand for corn and Latin America.

Speaker 4: Full year operating EBITDA of $2.58 billion was up 23% over 2020. Pricing and productivity more than offset cost headwinds, driving almost 180 basis points of margin improvement. This improvement is a result of focused execution by the team while managing through challenging supply chain dynamics and also continued cost inflation.

Full year operating EBITDA of $2 five 8 billion was up 23% over 2020.

Pricing and productivity more than offset cost headwinds driving almost 180 basis points of margin improvement. This improvement is a result of focused execution by the team while managing through challenging supply chain dynamics and also continued cost inflation.

Speaker 4: Let's go now to slide 7 where you can see the strong top-line results across every region. In North America, organic sales were up 4% for the year.

Let's go now to slide seven where you can see the strong topline results across every region.

In North America organic sales were up 4% for the year.

Speaker 4: Seed sales benefited from increased planted area for both corn and soybeans.

Seed sales benefited from increased planted area for both corn and soybeans as well as the continued industry wide penetration of enlist <unk> soybeans, which represented about 35% of the U S soybean market in 2021.

Speaker 4: as well as the continued industry-wide penetration of enlist E3 soybeans, which represented about 35% of the U.S. soybean market in 2021. We finished the year with corn price up 2% in North America, while soybean price was down 2%, driven by competitive pressure in the market.

Finished the year with corn price was 2% in North America, while soybean price was down 2% driven by competitive pressure in the market.

Speaker 4: North America crop protection delivered organic sales growth of 6% on continued demand for new technologies including enlist herbicide. Both herbicides and fungicides finished the year with double digit growth in the region compared to prior year. Crop protection prices were up 6% in response to rising input costs.

North America crop protection delivered organic sales growth of 6% on continued demand for new technologies, including enlist herbicide, both herbicides and fungicides finished the year with double digit growth in the region compared to prior year crop protection prices were up 6% in response to rising input costs.

Speaker 4: Crop protection volumes were flat year-over-year, in part due to the phase-out of select low-margin products and an approximate $70 million sales impact in the fourth quarter from supply constraints.

Crop protection volumes were flat year over year in part due to the phase out of select low margin products and an approximate $70 million sales impact in the fourth quarter from supply constraints.

Speaker 4: In Europe , Middle East, and Africa, we had organic sales growth of 6% driven by strong price execution and record sunflower seed volume. In crop protection, demand remains high for new and differentiated products including Erolex herbicide and Zorvec fungicide, which enabled us to drive price and volume and gain market share in the region.

In Europe , Middle East and Africa, we had organic sales growth of 6% driven by strong price execution and record sunflower seed volume.

In crop protection demand remains high for new and differentiated products, including <unk>, herbicide, and <unk>, fungicide, which enabled us to drive price and volume and gain market share in the region.

Speaker 4: In Latin America, we delivered 27% organic sales growth on strong volume and price gains. Execution of our price for value strategy coupled with price increases to offset rising input costs led to price gains of 10% compared to the prior year.

In Latin America, we delivered 27% organic sales growth was strong volume and price gains execution of our price for value strategy, coupled with price increases to offset rising input costs led to price gains of 10% compared to the prior year.

Speaker 4: Seed volumes increased 14 percent, driven by market share gains in Brazil's safrinha, while crop protection volumes grew 19 percent on strong demand for new and differentiated products such as isoclasts and gem velvet insecticides.

Seed volumes increased 14% driven by market share gains in Brazil, Saphena, while crop protection volumes grew 19% on strong demand for new and differentiated products, such as ice class and Jim Silva insecticides.

Speaker 4: Asia-Pacific organic sales were up 3% compared to the prior year with both volume and price gains.

Asia Pacific organic sales were up 3% compared to the prior year with both volume and price gains.

Speaker 4: Seed volumes were down largely due to COVID-related demand impacts and competitive dynamics, primarily in Southeast Asia. Crop protection organic growth of 4% was led by continued demand for new and differentiated products, including rinse core herbicide and paraxalt insecticide, both of which had volume gains in the region of more than 40% versus 2020.

<unk> volumes were down largely due to COVID-19 related demand impacts and competitive dynamics, primarily in southeast Asia.

Crop protection organic growth of 4% was led by continued demand for new and differentiated products, including <unk> herbicide and <unk> insecticide.

Both of which had volume gains in the region, but more than 40% versus 2020.

Speaker 4: Let's now move to slide 8 for a summary of our 22 guide.

Let's now move to slide eight for a summary of our 'twenty two guidance.

Speaker 4: We expect net sales to be in the range of $16.7 to $17 billion, representing 8% growth at the midpoint, driven by pricing and strong customer demand for new products and our best-in-class technology.

We expect net sales to be in the range of $16 $7 billion to $17 billion.

Representing 8% growth at the midpoint, driven by pricing and strong customer demand for new products and our best in class technology <unk>.

Speaker 4: 2022 operating EBITDA is expected to be in the range of $2.8 to $3 billion, a 13% improvement over prior year at the midpoint. Margins are also expected to improve with pricing and productivity actions, more than offsetting further cost inflation, leading to an approximate 80 basis point improvement at the midpoint over prior year.

2022, operating EBITDA is expected to be in the range of two eight to 3 billion a 13% improvement over prior year at the midpoint margins are also expected to improve with pricing and productivity actions more than offsetting further cost inflation, leading to an approximately 80 basis points.

Movement at the mid point over prior year.

Speaker 4: Operating EPS is expected to be in the range of $2.30 to $2.50 per share, an increase of 12% at the midpoint, which reflects lower average share count, but also a higher effective tax rate assumption compared to 2021.

Operating EPS is expected to be in the range of $2 30 to $2 50 per share an increase of 12% at the midpoint.

<unk> reflects lower average share count, but also a higher effective tax rate assumption compared to 2021.

Lastly, we expect free cash flow to be in the range of one three to $1 6 billion, which reflects more normalized receivables assumptions and replenishment of inventory in 2022 at the midpoint. It translates to an EBITDA to free cash flow conversion of approximately 50%.

Speaker 4: Lastly, we expect free cash flow to be in the range of $1.3 to $1.6 billion, which reflects more normalized receivables assumptions and replenishment of inventory in 2022. At the midpoint, it translates to an EBITDA to free cash flow conversion of approximately 50%.

Speaker 4: Let me talk about now the phasing of the first half versus second half revenue and operating EBITDA for 2022. On revenue, we expect strong revenue growth in the first half with 9 to 10 percent recorded growth, which would imply mid-single-digit growth for the second half.

Let me talk about now the phasing first half versus second half revenue and operating EBITA for 2022.

On revenue, we expect strong revenue growth in the first half with 9% to 10% reported growth, which would imply mid single digit growth for the second half. However.

Speaker 4: However, given the slower pace of inflation in early 2021 versus where we are today, we're expecting approximately 70% of our 2022 estimated cost headwinds will flow through in the first half.

However, given the slower pace of inflation in early 2021 versus where we are today, we're expecting approximately 70% of our 2022 estimated cost headwinds will flow through in the first half.

Speaker 4: This is largely driven by the seasonal timing of seed costs associated with higher commodity prices and the pace of cost inflation and crop protection in 2021, which was more than waited to the second half of the year.

This is largely driven by the seasonal timing of seed costs associated with higher commodity prices and the pace of cost inflation in crop protection in 2021, which was more than weighted to the second half of the year.

Speaker 4: As a result, we expect mid-single-digit growth in operating image off for the first half compared to prior year, whereas our full-year guide for operating image off growth is 13% at the midpoint.

As a result, we expect mid single digit growth in operating EBITDA for the first half compared to prior year, whereas our full year guide for operating EBITDA growth is 13% at the midpoint.

Speaker 4: Let's now go to slide nine where we'll provide some further detail on the key drivers included in the EBITDA guide.

Let's now go to slide nine where we'll provide some further detail on the key drivers included in the EBITDA guidance consistent.

Speaker 4: Consistent with prior views, pricing and seeds were more than offset the impact from higher commodity costs. For the year, based on demonstrated value creation of our seed products, we expect a global price lift amid single digits in local currency. Parsley offsetting this is approximately $275 million of commodity costs largely from the US and Brazil. And again, we expect the majority of the cost had when in seed will be recognized in the first half of the year.

Consistent with prior views pricing in seeds will more than offset the impact from higher commodity costs for the year based on demonstrated value creation of our seed products. We expect a global price lift of mid single digits in local currency, partially offsetting this is approximately $375 million of commodity costs.

Largely from the U S and Brazil, and again, we expect the majority of the cost headwind and Steve will be recognized in the first half of the year.

Speaker 4: Increased planted area in Latin America and global demand for our best-in-class technology, including continued penetration of enlist E3 soybeans, are expected to drive volume increases in this segment.

Increased planted area in Latin America, and global demand for our best in class technology, including continued penetration of enlist <unk> soybeans are expected to drive volume increases in this segment.

Speaker 4: In crop protection, demand for new products remains strong and is expected to drive an additional $300 million in revenue for the full year. In addition, we expect cost headwinds to be approximately $300 million as the complex supply chain dynamics and cost inflation will continue at least through the end of the year.

In crop protection demand for new products remains strong and is expected to drive an additional $300 million in revenue for the full year.

In addition, we expect cost headwinds to be approximately $300 million has the complex supply chain dynamics and cost inflation will continue at least through the end of the year.

Speaker 4: Summer to seed, the majority of these costs are expected to be recognized in the first half as we lap a lower cost basis in the first half of the prior year.

Similar to seed the majority of these costs are expected to be recognized in the first half as we lap a lower cost basis in the first half of the prior year.

Speaker 4: Price increases will help mitigate these cost headwinds, including another mid-single-digit price increase across the majority of our U.S. crop protection portfolio that was implemented in early January .

Rice increases will help mitigate these cost headwinds, including another mid single digit price increase across the majority of our U S crop protection portfolio that was implemented in early January .

Speaker 4: As a related SGA, we're expecting a hundred million in higher costs from investments to support growth and also more normalized bad debt of crules compared to 2021.

As it relates to SG&A, we're expecting $100 million and higher costs from investments to support growth and also more normalized bad debt accruals compared to 2021.

Speaker 4: In addition to pricing, we will continue to use productivity initiatives to drive margin improvement. For 2022, we expect productivity savings of approximately 200 million across both segments.

In addition to pricing we will continue to use productivity initiatives to drive margin improvement for 2022, we expect productivity savings of approximately $200 million across both segments.

Speaker 4: And with a stronger U.S. dollar relative to other key currencies on a year-over-year basis, we estimate a $200 million headwind from translation impact and hedging program costs. In addition to our implemented hedging programs, we'll continue to pursue local pricing where possible to mitigate this currency impact.

With a stronger U S dollar relative to other key currencies on a year over year basis, we estimate a 200 million headwind from translation impact and hedging program costs. In addition to our implemented hedging programs will continue to pursue local pricing where possible to mitigate this curve.

<unk> impact.

Turning now to slide 10, I wanted to leave you with what we view to be the key takeaways from today's call.

Speaker 4: Turning now to slide 10, I want to leave you with what we view to be the key takeaways from today's call. Obviously, we delivered and very, very pleased with our 2021 commitments, including impressive margin growth and cash flow while navigating a dynamic operating environment. As Chuck mentioned, we enter 2022 from a position of strength.

Obviously, we delivered and very very pleased with our 2021 commitments.

Including impressive margin growth and cash flow, while navigating a dynamic operating environment as Chuck mentioned, we entered 2022 from a position of strength.

Speaker 4: We expect a year of attractive growth supported by strong customer demand across the backdrop of a solid global ag fundamentals. We remain confident in our disciplined execution including pricing and productivity which will in turn drive margin expansion for the year.

We expect a year of attractive growth supported by strong customer demand.

<unk> the backdrop of a solid global AG fundamentals, we remain confident in our disciplined execution, including pricing and productivity, which will in turn drive margin expansion for the year are.

Speaker 4: Our balance sheet is strong, which provides us flexibility with our capital deployment strategy and allows us to build our track record of returning cash to shareholders while also continuing to fund growth opportunities.

Our balance sheet is strong which provides us flexibility with our capital deployment strategy and allows us to build our track record of returning cash to shareholders. While also continuing to fund growth opportunities. This is bolstered by improved funded status and our U S pension plan, which improved to better than now.

Speaker 4: This is bolstered by improved funded status in our U.S. pension plan, which improved to better than 90% at the end of 2021.

<unk> percent at the end of 2021.

Speaker 4: In 2022, we expect to return one to 1.5 billion of cash via dividends and share repurchases. This is on top of the more than 1.3 billion of cash return in 2021. It's a clear indication of our commitment to deliver value to our shareholders.

In 2022, we expect to return one to $1 5 billion of cash via dividends and share repurchases. This is on top of the more than $1 3 billion of cash returned in 2021, and it's a clear indication of our commitment to deliver value to our share.

Holders combined we believe this further differentiates core Teva as we're well positioned to deliver value in 2022 and the years to come.

Speaker 4: Combined, we believe this further differentiates Corteva as we're well positioned to deliver value in 2022 and the years to come. And with that, I'm going to hand the call back.

And with that I'm going to hand, the call back over to Jeff.

Speaker 2: Thanks, Dave. Now let's move on to your questions. I would like to remind you that our cautions 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.

Thanks, Dave 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.

Speaker 1: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Speaker 1: Again, it is star one to ask a question. We also ask that you please limit yourself to one question.

Again, it is star one to ask a question. We also ask that you. Please limit yourself to one question.

Speaker 1: We'll pause for just a moment to allow everyone the opportunity to.

Well pause for just a moment to allow everyone the opportunity to signal.

Okay.

Speaker 1: We will now take our first question from Joel Jackson at BMO Capital Markets. Your line is open. Go ahead. Hi. Good morning. Hi. Good morning. Thank you. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi. Hi.

We will now take our first question from Joel Jackson at BMO Capital markets. Your line is open go ahead.

Hi, Good morning, Chuck D.

Speaker 2: I know that the $2.95 billion placeholder target midpoint was a placeholder, and now your guidance is about $50 million less than what that placeholder said. Can you, with all the buckets you talked about, all the moving parts, be able to maybe talk about the $50 million delta, and also to that, is most of that really currency? And maybe you can elaborate a little bit on what the currency outlook is now for 2022 versus what you may have thought it was three months ago?

I know that.

The $2 95 billion comp leasehold or a midpoint.

A placeholder and now youre guiding to about $50 million less than what that placeholder side can.

Can you with all the buckets, you've talked about all the moving parts and people couldn't even talk about.

The $50 million Delta and also to that is most of that really currency.

And maybe you can elaborate a little bit on what the currency outlook is now for 'twenty versus what you might not have us three months ago.

Speaker 3: Yeah, good morning, Joel. So, yeah, the short answer is you're absolutely right. The difference, the way we would look at it, what's new would be currency. Let me give you the backdrop, though, of the guidance and what we're seeing in the market, and then I'll turn it over to Dave to drill down on the currency situation.

Yes, good morning, Joe So yes, the short answer is Youre absolutely right.

The difference with the way, we would look at it whats new would be currency.

Let me give you the backdrop, though of the guidance and what we're seeing in the market and then I'll turn it over to Dave to drill down on the currency situation.

Speaker 3: So first of all, you know, 2021 was a really strong year in ag. We saw a very strong demand for our product.

So first of all you know 22021 was a really strong year in AG.

We saw very strong demand for our products.

Speaker 3: higher prices across the board and farmers balance sheets are strong and their income statement.

Higher prices across the board and farmers balance sheets are strong in their income statements.

Speaker 3: And we expect very similar behavior in the ag markets in 2022. And right now, our order book is full. So this market, it's all about supply and price execution.

And we expect very similar behavior in the AG markets in 2022 and right now our order book is full so this this market, it's all about supply and price execution.

Speaker 3: And I think Cortevo is set up to succeed in both of those areas.

And I think <unk> is set up to succeed in both of those areas.

Speaker 3: The guidance that we laid out today, $2.8 to $3 billion of EBITDA, we think that that appropriately reflects the time of the year. Don't forget that the crop's not in the ground in Europe or in the United States yet, as well as some of the market uncertainties that we're seeing, namely around cost and inflation.

The guidance that we laid out today.

Two $8 billion to $3 billion of EBITDA, we think that that appropriately reflects the time of the year don't forget that the crops not in the ground in Europe or in the United States, yet as well as some of the market uncertainties that we're seeing namely around cost inflation.

Speaker 3: to your question though. So the midpoint of two, our midpoint of 2.9 billion dollars, it is double digit growth. It is still in line with the previous targets that have been provided, but it does have a new assumption which is really around currency headwinds.

To your question, though so the midpoint of our midpoint of $2 nine.

$1 billion. It is double digit growth. It is still in line with the previous targets that have been provided.

But it does have a new assumption, which is really around currency headwinds.

Speaker 3: Now, what I think is happening here is this is our current and best thinking today.

Now what I think is happening here is this is our current invest thinking today.

Speaker 3: The Corteva team is really focused on cost mitigation, really taking the downside risk off the table, while at the same time reinforcing our supply chain resiliency driving out execution, both in price, and supply chain to reach up as high as we can in terms of our guidance range here.

<unk> team is really focused on cost cost mitigation really taking the downside risks off the table while at the same time reinforcing our supply chain resiliency driving execution, both on price and supply chain to reach out.

As hard as we can in terms of our guidance range here and we're feeling pretty good about things, but it is so early in the season right now that this this is our best thinking and will make the usual will reflect this as we go through the quarters every quarter and I would expect that we would narrow our range over time, but to drill down on the specific question around currency.

Speaker 3: and we're feeling pretty good about things, but it is so early in the season right now that this is our best thinking. And we'll, like usual, we'll reflect this as we go through the quarters every quarter, and I would expect that we would narrow our range over time.

Speaker 4: But to drill down on the specific question around currency, I'll turn it over to Dave now. Sure. Joe just very quickly. And.

I'll turn it over to Dave now sure Joe just very quickly.

Youre exactly right and as Chuck said currency really is.

Speaker 4: You're exactly right, as Chuck said. Currently, really is the, you know, when you look through the lens, it really is the fee on, in terms of our thinking and our planning here. Just a couple things on courtesy. First of all,

When you look through the lens it really is the fee.

In terms of our thinking and our planning here just a couple of things on currency first of all.

Speaker 4: These are our best assumptions at this point in time. We use third party, obviously, inputs for this. We also have, as you know, hedge positions.

These are our best these are our best assumptions at this point in time, we use third party.

Obviously <unk>.

Inputs for this we also have as you know hedged positions, we come into the year.

Speaker 4: We come into the year with some hedged positions, but most of those are cash positions.

With some hedged positions, but most of those are cash positions and then if you will to translation hedging that we do do which is which is pretty much focused in limited, but that cash our translation hedging that we do.

Speaker 4: And then if you will, the translation hedging that we do do, which is pretty much focused and limited, but that cash or translation hedging that we do, is also included in the assumption. When you look at it, compared to, for example, what we've provided back in October , it's $100 million difference. And that...

Also included in the assumption when you look at it compared to for example, what we provided back in October .

It's $100 million difference.

Difference.

And that really does represent.

Speaker 4: the V, if you will, the variance compared to the guy that we had provided or the call at the reinforcement of the midterm guidance range that we had provided at that time. And also to provide just a little bit of perspective on this, just take a minute, is if you did simple.

That would be if you will the variance compared to the guide that we provided or the call. It the reinforcement of the.

Term guidance range that we provided at that time and also to provide just a little bit of perspective on this just take a minute is if you did simple math and looked at 2022 and just adjusted for currency and just say Youre equivalency.

Speaker 4: and looked at 2022 and just adjusted for currency and just say, you know, you're looking at equivalency.

Equivalency.

Speaker 4: Instead of being up 11% in revenue, you'd be up around 7. You'd be up higher than that. You'd be up, instead of 8%, you'd be up 11%.

Instead of being up 11% in revenue you'd be up around seven.

Higher than that you would be instead of 8% you'd be up 11%.

Speaker 4: at around 17.1 billion and in terms of ebitat rather than being up thirteen percent midpoint of our guy you'd be up around twenty percent which would put us at three billion roughly even

Around $17 1 billion and in terms of EBITDA, rather than being up 13% at the midpoint of our guidance you'd be up around 20%, which would put us at $3 billion roughly even.

Speaker 4: for the midpoint of the guide, which would translate to margin almost double in terms of base point improvement to around 140, 145%. So again, just simple math, but it provides insights hopefully to help address the point you're making.

The midpoint of the guide, which would translate to margin almost doubled in terms of basis point improvement to around 140% to 145%. So again, just simple math, but it provides insights hopefully to help address.

The point you're making.

Thank you.

Speaker 1: Move to our next question from Benson Andrews with Morgan Stanley . Your line is open. Please go ahead.

We'll move to our next question from Vincent Andrews with Morgan Stanley . Your line is open. Please go ahead.

Speaker 3: Thank you. Good morning, everyone. Maybe you could speak a little bit to the incremental seed cost inflation versus what you laid out three months ago, which I think is about a hundred million dollars higher. And I guess a couple of ways to go about this.

Thank you and good morning, everyone, maybe you could speak a little bit to the incremental seed cost inflation versus what you laid out three months ago, which I think is about $100 million higher than I guess, a couple of ways to go about this is first we're now anticipating a greater gross amount of inflation in 2022 than U S.

Speaker 3: You're now anticipating a greater gross amount of inflation.

Speaker 3: In 2022, then the new estimated for 2021

For 2021.

Speaker 3: And clearly the commodity price increases in 2021 or far more significant than in 2022. So I wonder if you could just bridge that and maybe if you can just also help us understand how much of this inflation is coming.

And clearly the commodity price increases in 2021 or a far more significant than in 2020 twos I Wonder if you could just bridge that and maybe if you can just also help us understand how much of this inflation is coming in corn versus soybeans versus the balance of your seed portfolio and if it's related to any particular geography or associated with the.

Speaker 3: in corn versus soybeans versus the balance of your seed portfolio. And if it's related to any particular geography or associated with the uptick and enlist acres to that 40% penetration that you're looking for.

Uptick in enlist acres to that 40% penetration that youre looking for.

Speaker 4: Sure, why don't I take this day, this is the morning. Why don't I take the first shot at that, and then Rajan, maybe you could add a little bit of color as well. Absolutely. Yeah, so really the three components that you would suspect. Again, our reference in October in terms of seed cost inflation was in the 250 to 300 million range. Let's call it 275. We're now at 375, so 100 million increase.

Sure why don't I take this is Dave.

Why don't I take the first shot at that and then Roger maybe you could add a little bit of color as well absolutely. Yes. So really the three components as you would suspect again.

Our reference into October in terms of cost inflation was in the $2 $50 million to $300 million range, let's call. It 275, we're now at $3 $75 million to $100 million increase.

Speaker 4: It's primarily when you think of commodity impact, it's primarily in the EU. There are some others, but that's significantly where it's coming from. We also have some additional headwind from yield. And then finally, and this is a common refrain, it's really freight and warehouse. And essentially evenly distributed across those three.

It's primarily when you think of commodity impact, it's primarily in the EU.

There are some others, but that's significantly where it's coming from we also have some headwind additional headwind from yield and then finally and this is a common refrain is really freight and warehouse and <unk>.

Essentially evenly distributed.

Across those three.

Raj on any other any other commentary on the commodity Kona just to build on that 10 minutes to answer your specific question. The crop that we are talking about from a commodity standpoint in Europe would be gone I think up in fact from a North America perspective, all of the numbers that are baked into the third quarter. So nothing has changed from a use standpoint via and the whole <unk>.

Speaker 5: In fact, from an North America perspective, all the numbers were baked into the third quarter. So nothing has changed. From a youth standpoint, we and the whole industry has had a tough thing with Kanollah, especially in Canada, and the yield impact there is increasing cost up versus what we had expected the last time we had said this. And the freight and warehousing, this really goes across the board. We've got big increases, not only in Brazil, but also in North America. We've got some actions planned with advanced analytics, et cetera, to try and see what we can do to mitigate. But at this point of time, that's where our cost increases versus the last time we're coming.

Industry has had a tough thing with canola, especially in Canada, and the yield impact that is increasing cost up versus what we had expected. The last time, we had said that and the freight and warehousing. That's really it goes across the board we've got big increases not only in Brazil, but also in North America, We've got some actual actions planned.

With advanced analytics et cetera to try and see what we can do to mitigate but at this point of time, that's where a lot of cost increases versus the last time are coming in that sick, we feel very good about our ability to expand margin the Boston could eases out here, but the pricing actions, we have and the productivity actions that we have plan should continue to drive.

Speaker 3: That said, we feel very good about our ability to expand margins. The cost increases are here, but the pricing actions we have and the productivity actions that we have planned should continue to drive the margin expansion in the seed business like we saw in 2021. I think we will reinforce that in 2022. Yeah, just just a couple comments, I guess, for the company broadly speaking, Vincent.

Our margin expansion in the seed business like we saw in 2021, I think we will reinforce that in 2022.

A couple of comments I guess for the company broadly speaking Vincent so the supply chain challenges are real any global supply chain operator like core Teva will have the same situation.

Speaker 3: So the supply chain challenges are real. Any global supply chain operator like Corteva will have the same situation. We think we've done a really nice job of mitigating as much of the cost as we can.

We've done a really nice job of mitigating as much of the cost as we can.

And we've got a full court press on just doing exactly that for 2022.

Speaker 3: And we've got a full-core press on just doing exactly that for 2022.

Speaker 3: At the same time, as I mentioned in my opening remarks, we are seeing very strong demand across the board for our products around the world.

At the same time as I mentioned.

And in my opening remarks.

We're seeing very strong demand across the board for our products around the world.

Speaker 2: So from a pricing perspective, what we've been able to do, and if you look at 2021, and then you look at how we've guided for 2022, the pricing increasing is offsetting the higher cost, and we are driving margin. And I think that that is really, really important to set the stage. I know there's a lot of industries out there that we're not able to do that. I think one of the good things about the agricultural industry right now is that we're in a very attractive market. And I think growers need the products. They need the technology. And certainly from a pricing execution perspective, I think we've demonstrated that we can move prices to cover costs and grow margin.

So from a pricing perspective, what we've been able to do and if you look at 2021, and then you look at how we've guided for 2022.

Reising, increasing is offsetting the higher cost and we are driving margin.

And I think that that is really really important to set the stage I know theres a lot of industries out there that we're not able to do that I think one of the good things about the agricultural industry right. Now is that we're in a very attractive market and I think growers need the products they need the technology and certainly from a pricing execution perspective, I think we've demonstrated that we can move.

We can move prices to cover costs and grow margins.

Speaker 1: I'll take our next question from Kevin McCarthy, a vertical research part.

We'll take our next question from Kevin Mccarthy vertical research partners.

Speaker 6: Good morning. Can you talk about the pricing outlook in crop protection chemicals? I think you had proposed a mid-single-digit price increase effective October 1. How is that flowing through? And related to that, if I look at slide 29 of your deck,

Good morning can you talk about the pricing outlook in crop protection chemicals, I think you had proposed a mid single digit price increase effective October one.

How is that.

Flowing through and related to that if I look at slide 29 of your deck.

Speaker 6: The crop protection chemical pricing in the quarter for herbicides and insecticides seems very different with herbicides running 15% on price mix versus negative 2 for insecticides. So could you perhaps unpack that for us and speak to some of the swing factors there, such as glyphosate and the incremental pricing that you're layering in?

The crop protection chemical pricing in.

In the quarter for herbicides, and insecticides seems very different with herbicides running 15% on price mix versus negative two for insecticides. So could you, perhaps unpack that for us.

And speak to some of the swing factors, there such as glyphosate and the incremental pricing that youre layering in.

Speaker 3: Sure, hi, Kevin. So you're right. There are obviously puts and takes, and it depends if we're talking about our commodity portfolio or our differentiated and new product portfolio. There's some differences there, but I'll have Tim just kind of walk you through a few of these, and that should hopefully set the context.

Sure Hi, Kevin So you're right. There are obviously puts and takes and it depends if we're talking about our commodity portfolio or our differentiated and new product portfolio Theres. Some differences there, but I'll have Tim just kind of walk you through a few of these.

And that should hopefully set the context, yes, Kevin when you when you think about that protection side Youre right. You use. The example in the U S where we implemented a price increase in January or excuse me in in October and I would say traditionally we price on a seasonal basis for most of our products and thats kind of the way crop protections and done your price at the beginning of the <unk>.

Speaker 7: Yeah, Kevin, when you think about the crop protection side, you know, you're right. You use the example in the US where we implemented a price increase in January , or excuse me, in October , and I say traditionally, we've priced on a seasonal basis for most of our products. And that's kind of the way crop protection is done. You've priced at the beginning of the season, and obviously you've looked and managed to, of course, the season, but you weren't actively managing this.

And obviously you'd look and manage through the course of the season, but you werent actively managing this.

Today, I would say, we're actively managing the crop protection pricing as Dave said and added Raj on reiterated we're working hard and we will offset all of the costs that we have but but but the US Example, that you started with there we priced in October for the upcoming season and Thats when we kick off our sales season, we announced in December .

In early January price increase across the board in the U S and that was implemented in <unk> and is in the marketplace right now and we're going to continue to monitor that and so.

Speaker 8: and is in the marketplace right now, and we're gonna continue to monitor that. And so that's how we're gonna deal with this as we go forward is to continue to be able to monitor and act accordingly as we work through the season. And that's a very different behavior than what's typically happened, certainly from our side. There are commodity products that are even different and those heavy commodity products we're seeing a tremendous amount of cost and price volatility. We're active even more frequently than that. That's even more regularly, but across the whole portfolio, we're actively managing pricing across the board and we'll continue to do that. And the team is committed to do that. It's not just the US action is happening around the world. And that's how we're gonna be able to offset as we work through this year. We'll take our next question from Chris Parkinson. Your line is open. Please go ahead. Right. Thank you very much for taking my question. So just a corner learning of some of the response you just had. There were some increases in the cost assumptions in CBC versus initial framework. I think most of us understand that. Can you comment on some of the dollar delta versus your prior expectations? Obviously some.

That's how we're going to deal with this as we go forward is to continue to be able to monitor and act accordingly, as we work through the season and Thats, a very different behavior than what's typically happened certainly from our side. There are commodity products that are that are even different in those commodity heavy commodity products, where we've seen a tremendous amount of of course.

And price volatility, we're actually even more frequently than that.

Even more regularly but across the whole portfolio.

We're actively managing pricing.

The board and we'll continue to do that and and.

The team is committed to do that it's not just a U S action is happening around the world and that's how we're going to we're going to be able to offset as the as we work through this year.

Speaker 1: We'll take our next question from Chris Parkinson, M.A. Zuhol. Your line is open, please go ahead.

We'll take our next question from Chris Parkinson MSA with <unk>. Your line is open. Please go ahead.

Speaker 8: Right, thank you very much for taking my question. So just a court learning of some of the response you just had, you know, there were some increases in the cost assumptions in TBC versus initial framework. I think most of us understand that.

Great. Thank you very much for taking my question. So just a corollary as some of the the response you just had.

There were some increases in the cost assumptions in CPC versus initial framework I think most of US understand that can you just comment on some of the dollar delta versus your prior expectations. Obviously some of this does hit on herbicide, but presumably it broadly transportation logistics, the generic inputs for formulation and perhaps intermediate pricing, but can you.

Speaker 8: Can you just comment on some of the dollar deltas versus your prior citations? Obviously some of those don't sit on herbicides, but presumably it's broadly transrotation logistics, you know, the generic inputs for formulation and perhaps intermediate pricing. But can you just comment on how you think these trends are actually involved throughout 2022 just given the current dynamics? Thank you very much. Thank you very much.

Comment on how you think these trends are actually in rubles.

2022, just given the current dynamics. Thank you very much.

Hi, Chris Yes, Suraj on can maybe drill down on a few of the questions that you've got there and then maybe Dave can wrap up with a higher level. How we did overall in 2021 and expectations for 2022 sure yes.

Speaker 3: Hi Chris, so Rajan can maybe drill down on a few of the questions that you've got there. And then maybe Dave can wrap up with sort of the higher level how we did overall in 2021 and expectations for 2022. Sure.

Speaker 5: I think I like you rightly pointed out between where we were last time and where we announced the single biggest change is glyphosate. And I think that continues to be a big part of the cost increase.

Yeah, Hi, Chris I think I like you rightly pointed out between where we were last time and where we announced the single biggest change is glyphosate and I think that continues to be a big part of the cost increase that said.

Speaker 5: That said, like Tim mentioned, we do cover the glycosate cost increases with price. We did that in 21 and so we feel very confident about that in 22. On freight and logistics, there is an increase just based upon the inflationary cost that we are seeing there, the tightness of supply, in freight, etc.

<unk> mentioned, the bill covered the glyphosate cost increases with price, we did that in 'twenty, one and so we feel very confident about that in 2002 on freight and logistics that increase just based upon the inflationary costs that we are seeing the tightness of supply and freight et cetera, but the one element specifically I would point out is that our supply chain.

Speaker 5: But the one element specifically I would point out is that as supply chains become tight, we do have to plan for air frayed type of things to make sure that we can get the high margin products to the customers in time and so that also is something that continues to evolve.

We do have to plan for air freight type of things to make sure that we can get the high margin products to the customers in time and so that also is something that continues to evolve from other raw material perspective, I think they could either.

Speaker 5: From other raw material perspective, I think the increases are more or less in line with what we have said before. The inflationary drains continue. We do have some strong productivity actions with our procurement dream to try and offset that, but that continues to be what we had planned for last time we had mentioned this. So those would be some of the specific things that are driving the cost increases on the crop protection side.

Or less in line with what we have said before the inflationary trends continue we do have some strong productivity actions with our procurement team to try and offset that but that continues to be what we had planned plus.

Last time, you had mentioned that so those would be some of the specific things that.

Driving the cost increases on the crop protection side of it.

Speaker 4: And Chris was the other element of your question, make sure I'm answering correctly. Let me just share with you 2021. And I think we had talked about this, just make sure we've got these correct for you.

And Chris was the other element of your question make sure I am answering correctly me just share with you 2021, and I think we had talked about this but just make sure. We've got these correct for you.

Speaker 4: Crop Protection 2021, full year, 11% organic growth.

Crop protection to 2021 full year.

11% organic growth, we had price gains in every region, we had 6% volume gain and by the way that's 6% volume gain.

Speaker 4: We had price gains in every region. We had 6% volume gain. And by the way, that's 6% volume gain.

Speaker 4: is net of nearly a 4% impact from discontinued products. So, you know, pretty significant performance.

Is is net of nearly a 4% impact from discontinued products.

Pretty pretty significant performance and then operating EBITA was up 20% margins improved more than 100 basis points. So I think that Raj on really sets. The stage as we think about 2022 and again, what we talked about and reinforced was the contribution of new products $300 million.

Speaker 4: And then operating EBITDA was up 20% margin has improved more than under basis points. So I think that Rajan really sets the stage. As we think about, 2022, and again, what we talked about and reinforced was the contribution of new products, $300 million in terms of our plan number of guides, number for new product contribution revenue in 2020.

In terms of our planned number of guidance number for new product contribution revenue in 2022.

Speaker 5: Absolutely the new product portfolio continues to grow and it will help us not only offset the cost increases But also from a pricing opportunity creates another opportunity for us to extract value and put that for the bottom line So completely agree there. Yeah, thank you

Absolutely the new product portfolio continues to grow and it will help us not only offset the cost increases, but also from a pricing opportunity creates another opportunity for us to extract value and put that to the bottom line so completely agree to.

Thank you.

Okay.

Speaker 1: We'll take our next question from P.J. Juvicar with Citi. Your line is open. Please go.

We'll take our next question from P. J <unk> with Citi. Your line is open. Please go ahead.

Speaker 9: Yes, hi, good morning. I was especially questioned on insecticides. You know, despite new products there, insecticide volumes were down in the 4Q and for the full year. And I know that you stopped selling some low-margin products. Was that a big impact in insecticides? And then taking a step back on insecticides, I think, you know, there are new chemistries in insecticides that are becoming popular, like, biodegradable insecticides.

Yes, hi, good morning.

First to your question on insecticides.

New products there.

So if you said volumes were down in the fourth Q1 for the full year.

And I know that you stopped selling some low margin products.

Was that a big impact in insecticides, and then taking a step back on insecticides I think there are new chemistries.

Insecticides.

Becoming popular like biodegradable insecticides.

Speaker 9: And they're taking share away from older chemisties like you know, carbohydrates and chloroperephores.

And they're taking share away from older Chemistries like.

Carbo Medicine chlorpyrifos.

Speaker 9: Can you talk about your portfolio and how much of that is in the older chemistries versus how much in the new chemistries and what's the negative volume impact from the old chemistries? Thank you.

Can you talk about your portfolio and how much of that is in the order chemistries versus how much is the new chemistries and what's the negative volume impact from the older Chemistries.

Yes.

Speaker 5: Hi, EJ. Why don't I take that? Our first information was let's start at the big picture. I think if you take the products that we have discontinued like you wanted out, Toclo Parifazes, one of them, the Lomarjan products, our insecticide business actually grew 14% year over year. So we have seen double digit growth and that continues to be a franchise that continues to do well for us.

Yes, Hi, Vijay why don't I take that.

I will first and foremost lift started a big picture I think if you take the products that we have discontinued like you pointed out the upload by defaults is one of them the low margin product.

<unk> business actually grew 14% year to let it go so we have seen double digit growth and that continues to be a franchise that continues to do well for us related to the profile of the insecticide market how that is changing youre exactly right.

Speaker 5: related to the profile of the insecticide market, how that is changing, you are exactly right. And let me double click on spinosons. And this is the world's largest selling insecticide, which is naturally derived. And we are on track this year to get to about a billion dollars on the spinosons franchise.

Let me double click on been often and this is the world's largest selling insecticide, which is naturally that I and we are on track this year to get to about $1 billion on the spinoff and franchise not only out of you're seeing increased volume from the capacity increases that we have built and we continue to see pricing.

Speaker 5: Not only are we seeing increased volume from the capacity increases that we have built in, we continue to see price increases and some of the productivity actions that we are taking are actually helping us even increase margins as the product continues to grow from a top line perspective. So the spinosent business continues to be a big part of our portfolio.

Increases and some of the productivity actions that we're taking are actually helping us even increase margins as the product continues to grow from a topline perspective, so the spinoff and business continues to be a big part of our portfolio talking about new product ISO class comes to mind I took last again. This is a product which is getting close to 300.

Speaker 5: Talking about new products, isoclast comes to mind, isoclast again this is a product which is getting close to 300 million dollars and it's been a big part of what we are doing.

And that's been a big part of what we are doing.

Speaker 5: A pyroxoid, this is another product which we talk about in Asia Pacific.

<unk> sorry. This is another product, which we talked about in Asia Pacific. So the reason I'm walking you through all of this is that the patented and differentiated part of our insecticide portfolio is actually pretty large and these are high margin products, which go through diverse crops. We have the balance that we see from natural products and products that continue to grow so we feel.

Speaker 5: So the reason I'm walking you through all this is that the patented and differentiated part of our insecticide portfolio is actually pretty large. And these are high margin products which go through diverse crops. We have the balance that we see from natural products and products that continue to grow. So we feel really good about the insecticide portfolio that we have. And the 14%, just to underline that growth that we had despite the product phase out, underlines that. And we continue to expect to see that same momentum in 22 from a top line, but more importantly, margin expansion.

Really good about the insecticide portfolio that we have and the 14% just to underline that growth that we had despite the product without underlines that and we continue to expect to see that same momentum in 'twenty two from a top line, but more importantly margin expansion.

Okay.

Well move to our next question David Begleiter at Deutsche Bank. Your line is open. Please go ahead.

Speaker 10: We'll move to our next question. David Baglider at Georgia Bank. Your line is open. Please go ahead. Thank you. Good morning. I'm Chuck. You've now been CEO for three months.

Thank you good morning.

Chuck you've now been CEO for three months of Tampa.

What's your perspective on what it does well and what it could do better.

Speaker 10: better. You also mentioned some faster-paced growth going forward. Can you give a little more color on how you hope to unlock the value?

You also mentioned.

Some faster paced growth going forward can you give a little more color on how you hope to unlock the value you highlighted thank you.

Speaker 11: Yeah, thanks David. Sure. So you're right. I've been on the job now for three months. It's been great. I've

Yeah. Thanks, David sure So you're right I've been on the job now for three months, it's been great.

Speaker 11: I've seen a lot of the operations primarily in North America, I haven't went international yet because of COVID, but obviously integrating with the global team.

I've seen a lot of the operations, primarily in North America haven't went to international yet because of Covid.

Obviously integrating with the global team for <unk>.

Speaker 11: First of all, what I'd say is I'm quite pleased with the financial and the operating performance throughout 2021 and certainly how we ended the year.

First of all what I'd say is I am quite pleased with the financial and the operating performance throughout 2021, and certainly how we ended the year.

Speaker 11: And I would say that I'm more optimistic today than when I first joined. There is significant value in this company to be delivered. We're doing that work now. It's a little early for me to give you numbers, but some of the areas that I think we need to focus on.

And I would say that I'm more optimistic today than when I first joined there is significant value in this company to be delivered we're doing that work now it's a little early for me to give you numbers, but some of the areas that I think we need to focus on obviously in this environment. What we're talking about is price execution and supply chain.

Speaker 11: Obviously, in this environment, what we're talking about is price execution and supply chain resiliency. And I think that the company has invested a lot of force into that area. But there's probably more work we need and should be doing, just like every company in that area. The other is our technology and innovation pipeline. I think it's a great asset for the organization. I think we have some wonderful future products coming out of the pipeline that's going to drive long-term value. And I'm really pleased with what I've seen so far.

Resiliency and I think that the company has invested a lot of.

It forced into that area, but there's probably more work, we need and should be doing just like every company in that area. The other is our technology and innovation pipeline I think it's a great asset for the organization I think we have some wonderful future products kind of coming out of the pipeline that's going to drive long term value and I'm really pleased with what I've seen so far.

Speaker 11: then some of the remarks we've already made. So we are having a really good look at the global portfolio and what I would call the operational footprint. So...

Then some of them remarks, we've already made so we are having a really good look at the global portfolio and what I would call the operational footprint. So we're looking at where we make money and where we spend money just to be candid with you.

Speaker 11: We're looking at where we make money and where we spend money, just to be candid with you. And we're unlocking, we think there's a lot of opportunity in these areas, and we've got a team that's actively working around the clock on these issues.

And we are unlocking we think theres a lot of opportunity in these areas and we've got a team that's actively working around the clock on these issues.

Speaker 6: And it's probably a little like I said a little early to get too far ahead of this work, but we're quite excited about it. So...

And it's probably a little like I said, a little early to get too far ahead of this work, but we're quite excited about it. So what we plan to do is we plan to have an investor day likely in the summer or late summer, where we would like to share with the world or some new targets some new financial targets from new operating targets. We would also like.

Speaker 6: What we plan to do is we plan to have an investor day, likely in the summer or late summer, where we would like to share with the world some new targets, some new financial targets, some new operating targets.

Speaker 6: We would also like to showcase the technology pipeline. I think it is going to be a great thing for the world to see what we're doing from a technology perspective. And putting on all this together, what it means for long-term value creation for Creteva. So the hard work's being done now. I think there's a lot of excitement. I think that this management team is up for the challenge and the change. And we'll be back to you probably by the summertime for our investor day.

To showcase the technology pipeline I think it is going to be a great thing for for the world to see what we're doing from a technology perspective, and putting all this together what it means for long term value creation for <unk>. So the work the hard work is being done now I think theres a lot of excitement I think that this management team is up for the challenge and the change.

And we will be back to you probably by by the Summertime for our Investor day.

Well go next to Jeff Zekauskas with J P. Morgan. Your line is open. Please go ahead.

Speaker 12: I'm next to Jeff Sakakis with J.P. Morgan. Your line is open. Please go ahead. Thanks very much. A two-part question. Can you talk about how much your royalty payments decreased in 2021 and what were the factors?

Okay.

Thanks, very much a two part question.

Can you talk about how much your royalty payments decreased in 2021 and what words.

Factors behind that and what you expect for 2022.

And secondly, your operating cash flow was <unk>.

Speaker 12: higher than your EBITDA in part because you're you were able to elevate your level of payables by maybe 500 million year over year.

Higher than your EBITDA.

In part because your you were able to elevate your level of payables by maybe $500 million year over year.

Speaker 12: Can you run with a much higher level of payables than you've been doing historically? So that you...

Can you run with a much higher level of payables than you've been doing historically, so so that your operating cash flow levels remain pretty high relative to EBITDA.

Oh, Okay, well why doesn't Raj I'll take the royalty question and Dave you can handle the operating cash flow sure go ahead, Roger Good morning, Jeff on the royalties, but we did see.

Speaker 5: Okay, why doesn't Rajan take the world-y question and Dave you can handle the operating cash flow? Sure, so go ahead Rajan. Yep, good morning Jeff. On the royalty spot we just see a set of improvement in our royalty reduction in 2021.

The improvement in that introduction in 2021.

Speaker 5: Some of that is the continued ramp-up of the Enlist portfolio, but we also had work done on the con side with some non-asserts that we've had negotiations done. So we did see a step improvement, about $80 to $90 million on royalty deductions in 2021.

Some of that is the continued ramp up of enlist portfolio, but we also broke down on the corn side with some nominal.

Negotiation done so we did see a step improvement about 80% to $90 million on royalty deductions in 2021.

Speaker 5: We are on track for our long-term royalty neutral by the 2028-2029 period. We will see some marginal improvements in 2022, primarily continued by driving the Enlist portfolio. We are also beginning to launch Enlist in our own Corteva germplasm, which will be a further reduction of royalties in 2022. But the big step changes are going to come in from 2023.

And on track, what our long term would be too big.

It got in driving neutral by 2028, 2000, 2009 period, where you'll see some marginal improvements in 2022, but I'm really continued by driving the analyst portfolio.

Also beginning to launch enlist and our own core termite jumped plasm, which will be a further reduction of the rfps in 'twenty two but the big step changes that are going to come in from 2023. There are some offsets that we do have some increases obviously in spot molecule part of.

Speaker 5: There are some offsets where we do have some increased royalties for molecule for the traits that we use in soybeans and Latin America, etc. But all in all, we are on track for delivering against the commitment of being a net positive. We had a big improvement in 2021 and we will see some changes in 22 with step improvements 23 on.

Great.

In soybeans in Latin America et cetera, but all in all we are on track for delivering against our commitment of being a net positive.

The big improvement in 'twenty, and 'twenty, one and we'll see some changes in 'twenty, two with step improvement 'twenty pre op.

Speaker 4: Yeah, and Jeff, I could take maybe part two of that, which, you know, around the payables and the cash.

Yeah, and Jeff I can maybe start to that which around the payables and the cash flow from operations as well as our free cash flow. So.

Speaker 4: flow from operations as well as our free cash flow. So.

Speaker 4: You know, as you said, we had a lot of focus and a lot of positive that resulted from that focus in terms of our working capital.

As you said we had.

A lot of brokers and a lot of positive that resulted from that focus in terms of our working capital initiatives in 2021.

Speaker 4: initiatives in 2021. We had, as you said, we had the benefit of payables. And specifically there, we had a lot of focus around our days payables outstanding as well as our average weighted daily payment terms. So that's just going to continue. The numbers that I think are really important here when we think about our 22 guys really relate to.

We had as you said, we had the benefit of payables and specifically there we had a lot of focus around our days payables outstanding as well as our average weighted daily payment terms. So thats just going to continue the numbers that I think are really important here when we think about our 'twenty two guide really.

Related to receivables, so we had a significant benefit.

Speaker 4: So we had a significant benefit in terms of our receivables performance in our cash collections in 2012.

In terms of our receivables performance in our cash collections in 2021, we expect to continue attractive, but not nearly to that level performance in 2022, that's the big variable as well as some change year over year in terms of the contribution from prepaid or deferred.

Speaker 4: We expect to continue attractive, but not nearly to that level performance in 2022. That's the big variable, as well as some change year over year in terms of the contribution from prepaid or deferred revenue, particularly in the US.

Revenue, particularly in the U S.

Speaker 4: in the fourth quarter. So that's really the the difference when you walk year over year in terms of our cash from operations cash taxes are essentially

In the fourth quarter. So that's really the difference when you walk year over year in terms of our cash from operations cash taxes are essentially.

Speaker 4: The same other elements in terms of the cash from operations are essentially the same. And then when you look at the free cash flow, we are forecasting.

Same.

The other elements in terms of the.

The cash from operations are essentially the same and then when you look at the free cash flow we are forecasting.

Speaker 4: and slide up to $70 million up tick on our cat backs on a year over here, over here base.

Slight upticks $70 billion uptick on our Capex on a year over year on a year over year basis, Jeff just maybe a couple of comments. It's interesting how you put these two questions together. So if you look at it from an operating perspective, what we're trying to do with royalties, our new CPE products driving some of the operational work I just described that's going to drive.

Speaker 6: Yeah, Jeff, just maybe a couple of comments. It's interesting how you put these two questions together. So if you look at it from an operating perspective, what we're trying to do with royalties are our new CP products.

Speaker 11: driving some of the operational work I just described. That's gonna drive enhanced margin.

<unk> enhanced margins and then Dave and his team are really focused on cash cash management and trying to get as much of that margin into the cash as we can and I think that there's just a tremendous opportunity here for this company to generate more cash flow.

Speaker 11: and then Dave and his team are really focused on cash cash management and trying to get as much as that margin into the cash as we can and i think that there's just a tremendous opportunity here to for this company to generate more cash flow

Thank you.

Speaker 1: We'll move next to Steve Byrne with Bank of America. Your line is open.

We'll go next to Steve Byrne with Bank of America. Your line is open. Please go ahead.

Yes. Thank you.

Speaker 13: Yes, thank you. There's been some recent EPA commentary about dicamba that suggests they might ban over the top use in 2023. If that were announced sometime in this calendar year, where do you think that would drive in less penetration in 23?

There's been some recent EPA commentary about dicamba.

Suggest they might ban over the top use in 2023.

That were announced sometime in this calendar year, where do you think that would drive unless penetration in 'twenty three.

Speaker 13: Will you have any extend left in your soybean seed platform in 2023?

Do you have any extend left in your soybean seed through form in 2023.

Speaker 13: uh... and those built that all legal settlement with bear will will there be any more payments on that after this year

And what was the.

That all legal settlement with Bayer will there be any more payments on that after this year.

So Steve this is <unk> nice to hear from you.

Speaker 5: So, Steve, this is Rajan. Nice to hear from you. Well, the Endless franchise continues to grow. And Endless as a system, actually, this year, I think will be costing a billion dollars in there. And the Endless herbicide is a big part of it. Our estimate is that Endless system, when it crosses 40% this year, more than 80% of the acres that have the Endless system actually use the Endless herbicide.

The enlist franchise continues to grow and enlist is a system actually this is I think we'll be crossing $1 billion in debt and the enlist herbicide is a big part of it.

Honest inmate does that enlist system and it cost us 40% up this year more than 80% of the acres that have the enlist system actually use the enlist herbicide, we do have a very strong asset and a strong supply chain. So as opportunities come up to expand analyst I think we have the flexibility and capability of growing the enlist hub.

Speaker 5: We do have a very strong asset and a strong supply chain. So as opportunities come up to expand the endless, I think we have the flexibility and capability of growing the endless herbicide business.

Besides business also happy to say that we did get the seven year registration done our regulatory and R&D team did a fantastic job of getting that so the customer demand.

Speaker 5: Also happy to say that we did get the seven-year registration done. Our regulatory and R&D team did a fantastic job of getting that.

Speaker 5: So the customer demand gets the confidence in the system and so we see continued growth of where the endless system would go.

<unk> in the system and so we see continued growth off event. The enlist system would go about dicamba, we'll wait and see how the market react, but I think we've got the flexibility and the confidence to be able to continue to grow the enlist system franchise, and we do have the supply chain flexibility.

Speaker 5: About Dicamba, we'll wait and see how the market reacts, but I think we've got the flexibility and the confidence.

Speaker 5: to be able to continue to grow the endless system franchise. And we do have the supply chain flexibilities to grow the endless herbicide as the need arises.

So the enlist herbicide as the need arises.

We'll move next to John Roberts with UBS. Your line is open. Please go ahead.

Speaker 1: Next we'll move next to John Roberts with UBS. Your line is open. Please go ahead.

Speaker 3: Thank you. Chuck, back to your first impressions. You bring a lot of experience in the retail channel and Corteva uses retail for pesticides and for some of the seeds like Brevon. Anything surprising in how Corteva uses retail or in the bundling programs or in the Pioneer brand's direct strategy?

Thank you Chuck back to your first impressions you bring a lot of experience in the retail channel and <unk> uses retail for pesticides and for some of the seeds like prevent anything surprising and how courts heavy users retail or in the bundling programs were in the pioneer brands direct strategy.

Speaker 11: Yeah. Hi, John . So, so, so far what I've seen and I've talked to all of our major retail customers and I've got lots of insight. They were very candid with me. And it was great conversations over the last, I'd say, 2 months.

Yeah, Hi, John so.

So so far what I've seen and I've talked to all of our.

Major retail customers and I've got lots of insight they were very candid with me.

It was a great conversations over the last I'd say two months. So look the pioneer network I still think as a strategic asset so I want to be clear on that.

Speaker 11: So, look, the Pioneer Network, I still think, is a strategic asset, so I want to be clear on that. It's unique. It drives a lot of value for Corteva, and I think there's obviously things that we can do to improve it and to engage, but overall, I'm really pleased with what I've seen.

Its unique it drives a lot of value for <unk>.

And I think there is obviously things that we can do to improve it.

To engage but overall I'm really pleased with what I've seen.

Speaker 11: But I think there is an untapped opportunity for companies like Corteva to have a deeper relationship with the retail channel. So Brevont, for example, it makes really good sense. And the retailers are asking for more choice.

I think there is an untapped opportunity for companies like <unk> to have a deeper relationship with the retail channel. So <unk>.

For example, it makes really good sense and the retailers are asking for for more choice.

Speaker 11: and they want that choice from companies that can bring real technology uh... to them because it helps them differentiate with their customers if they can bring uh... differentiated technology

And they want that choice from companies that can bring real technology to them because it helps them differentiate with their customers. If they can bring differentiated technology. It's early days, but what I've seen so far is we're having and I'll maybe have Tim comment on some specific for 2022, but we had a very good year in 2021.

Speaker 11: It's early days, but what I've seen so far is we're having, and I'll maybe have Tim comment on some specifics for 2022, but we had a very good year in 2021 with Brevont. I think that there's good demand out there. There's a lot of energy in terms of wanting to engage with Corteva, with the technology. And then beyond that, I think what we can see is that our crop protection products, the differentiated ones.

With <unk> I think that theres good demand out there theres a lot of energy in terms of wanting to engage with core Teva with the technology and then beyond that I think what we can see is that our crop protection products the differentiated ones.

Speaker 11: Very, very strong demand from the retail channel and is there an opportunity to have a different relationship, a more strategic relationship with the retailers? Absolutely. In fact, on almost every conversation, that's how we ended it with this should not just be a commercial transaction, this needs to be much more strategic and what that means, we need to take some time to figure it out.

Very very strong demand from the retail channel and is there an opportunity to have a different relationship a more strategic relationship with the retailers are absolutely in fact, almost every conversation. That's how we ended it with with this should not just be a commercial transaction this needs to be much more strategic and what that means we need to take some.

Time to figure it out, but I think that there is a really good opportunity here for <unk> to have <unk>.

Speaker 7: But I think that there's a really good opportunity here for Kertava to have deeper relationships with the retail channel. And I think that would be welcome. Maybe Tim, you can just cover what you're seeing with the retail channel in Bravant. Yeah, absolutely. Chuck and John , great question. You know what? We've been talking about Bravant in the US for a little while here. But we got to remember that 2021 was really the completion of our first season as a business with Bravant in the US. And good news is, we met or beat our price and volume goals that we had.

<unk> relationships with the retail channel and I think that would be welcome maybe Tim you can just cover what youre seeing with with the retail channel and provide yeah, absolutely Chuck John Great question.

We've been talking about a robot in the U S for a little while here, but we've got to remember that 2021 was really the completion of our first season.

Business with providing the U S and good news is we met or beat our price and volume goals that we had one of the things we talked about in your question really goes to it is building that credibility with our channel partners.

Speaker 7: You know, one of the things we talked about and your question really goes to it is building that credibility with our channel partners and, you know, we needed this, uh, you know.

We needed to provide business to not only be good for us, but also good for their business and that is very important for us and finally, we obviously needed to satisfy our farmer customers. Good news coming out of 2021 is we're happy with how it turned out for our business feedback we're getting from our channel partners is exceptional and I had an opportunity earlier this week to meet with.

Speaker 7: and other farmer customers. The good news coming out of 2021 is we're happy with how it turned out for our business. Feedback, we're getting from our channel partners. It's exceptional and I had an opportunity earlier this week to meet with a couple of retail groups out of the Northern Corn Belt and got very good feedback from them on how we're doing and also product performance was outstanding. So farmers are very satisfied with how the Vermont business performed for them. So it really has translated into a much greater point of growth for our business and retail. I think over time our objective is not to go out there and do cross sells and things like that. It's to build these deep relationships with our retail partners on how we can go out and do good business together across both seeding, crop protection and that's what's important.

A couple of retail groups out of the northern corn belt and got very good feedback from them on how we're doing and also product performance was outstanding. So farmers are very satisfied with how how the provide business performed for them. So it really has translated into a much greater point of growth for our business in retail I think over.

Time, our objective is not to go out there and do cross sells and things like that it is to build these deep relationships with our retail partners on how we can go out and do good business together across both seed and crop protection and that's what's important and as we as we go into 2022 year to a robot.

Speaker 7: with our retail partners on how we can go out and do good business together across both seeding, crop protection, and that's what's important. And as we as we go into 2022, year two of Revont.

Speaker 7: You know, we're expecting growth similar to what we had in 2021 in terms of volume. So that's that's that's very good where we're at. And our order position supports that right now. And certainly the strong feedback we've gotten from our channel partners supports that their enthusiasm for what we're doing there. So it is a great story for our our business. And also, it is a very strategic action for Corteva as we build our as we build our relationship with our distributor and retail.

We're expecting growth similar to what we had in 2021 in terms of volume. So that's very good where we're at in our order position supports that right now and certainly the strong feedback we've gotten from our channel partners supports that their enthusiasm for what we're doing there. So it is a great story for our business and also it is a very strategic action for Teva.

As we build our channel as we build our relationship with our distributor and retail partners.

Speaker 1: We'll go next to Michael Pike in with Cleveland Research. Your line is open, please go ahead.

We'll go next to Michael <unk> with Cleveland Research. Your line is open. Please go ahead.

Speaker 14: Yeah, good morning. I was hoping to get a little bit more of an update on kind of in South America in the back half of the year.

Yes, good morning, I was hoping to get a little bit more of an update on kind of in South America in the back half of the year.

Speaker 14: Conquista and your outlook for the acreage there over for this year, and then over the next couple of years, and what it might mean for incremental sales and herbicides as well.

Keith in your outlook for the acreage there over this year and then over the next couple of years and what it might mean for incremental sales of enlist herbicides as well.

Speaker 7: Tim, why don't you take that for Michael? Yeah, Michael. I mean, obviously, you know, we're still wrapping up the 2021-2022 season in Latin America and working through that and really excited about how that's gone. And and looking at the 2022-23 season here in the second half, you know, Conquesta was an important part. I'm not necessarily from a financial or impact on our results, but in terms of a big step forward in terms of a strategic initiative and the way we positioned.

Tim why don't you take that for Michael Yes, Michael I mean, obviously, we're still wrapping up the 2021 2022 season in Latin America, and working through that and really excited about how that's gone in and looking at the 2022 23 season here in the second half can catch there was.

An important part of not necessarily from a financial or or impact on our results, but in terms of a big step forward in terms of our strategic initiative and the way we positioned our <unk> business. This year was really to go out there and do this as a pilot allow our customers to get experience in and get a good idea of how the technology.

<unk> will work in the marketplace.

As we go into 2022 2023, so that crop that will be planted in the second half of the season I would still think of it in terms of that scale.

The reason is we're still introducing the technology, we're still filling out the portfolio of products that are available. So farmers have a good selection of varieties that fit their needs and also we want to get we want it we want to make sure that customers have a very positive experience with the technology not just from an insect control, but also we'd management standpoint.

Speaker 15: farmers have, a good selection of varieties that fit their needs. And also, you know, we want to get, we want to make sure that customers have a very positive experience with the technology, not just from an insect control, but also weed management standpoint, as you said. So we're still in that, I'd say, slow ramp-up phase. It's meaningful and important work for us, and we're very committed to it. As we go down the road, obviously, you know, as the portfolio fills out, we'll continue to ramp that up. I think that the herbicide system, it's an important part. You know, there's tremendous focus in Latin America, and especially Brazil, on insect control within soybeans. But I think our ability to position and list herbicide alongside that strong insect protection is going to bring new value and help differentiate congestant in the marketplace. So, you know, I'm sure as we go through and do our technology day, we'll update what that growth trajectory might look like. But think about this next half of the year. It really is sort of an expansion of that pilot so that we can really get that technology well-established and understood in the marketplace. We'll move to our next question. It comes from Arun Bishwanathan at RBC Capital Markets. Your line is open. Please go ahead. Great. Thanks for taking my question. I just wanted to clarify. So it sounds like...

As you said so we're still in that I'd say slow ramp up phase, it's meaningful and important work for us and we're very committed to it as we go down the road obviously.

As the portfolio feels out will continue to ramp that up.

I think that the herbicide system.

It's an important part there is tremendous focus in Latin America, and especially Brazil, an insect control within soybeans, but I think our ability to position enlist herbicide alongside that strong insect protection is going to bring new value and help differentiate contest in the marketplace. So.

I'm sure as we go through and do our technology day, we'll update what that growth trajectory might look like but think about this next half of the year. It really is sort of an expansion of that pilot. So that we can really get that technology, well established and understood in the marketplace.

Speaker 7: growth trajectory might look like, but think about this next half of the year, it really is sort of an expansion of that pilot so that we can really get that technology well established and understood in the marketplace.

Speaker 1: We'll move to our next question. Comes from Arun Bishwanathan at RBC Capital Markets. Your line is open, please go ahead.

Well move to our next question comes from Arun Viswanathan of RBC capital markets. Your line is open. Please go ahead.

Speaker 15: Great. Thanks for taking my question. I just wanted to clarify. So it sounds like you've incorporated kind of a $50 million currency headwind for for 22 into the guidance.

Great. Thanks for taking my question.

Just wanted to clarify so it sounds like you've incorporated kind of a $50 million currency headwind for 'twenty two into the guidance.

Speaker 15: Where I guess are you most concerned about, and then you also express that you potentially could have some pricing actions that would offset that. So I guess where would you think that you could actually be successful in gaining price and maybe to offset the currency specifically and maybe you could comment on channel inventories as well in certain of those regions, that'd be great.

Where I guess are you most concerned.

And then you also expressed that you potentially could have some pricing actions that would offset that so I guess, where would you think that you could actually be successful in and gaining price and maybe you can get that.

The currency, specifically and maybe if you can comment on channel inventories as well in certain of those regions that'd be great. Thanks.

Speaker 4: Why don't I take the currency piece and then Tim you want to talk about

Why don't I take the currency piece and then Tim you want to talk about.

Speaker 4: channel inventory. Thank you very much. So on the currency side of it, as we said, we've built in a $200 million

So channel inventory. Thank you very much so on the currency side of it.

And as we said, we built in a $200 million.

Speaker 4: EBITDA impact when you when you walk the 2021 to 2022 midpoint, and significantly, it's it's across the range of currencies.

EBITA impact when you when you walk the.

2021% to 2020 to mid point.

Significantly its across the range of currencies.

Speaker 4: you know, that we're that we're exposed to. Again, it's a forecast. It also includes some of our hedge positions.

That were that were exposed to again, it's a forecast. It also includes some of our hedge positions.

Speaker 4: today, specifically on the Brazilian Rio, I would say in terms of price

Today, specifically on the Brazilian real.

I would say in terms of pricing.

Speaker 4: We'll look at that in every market, in wherever we have opportunity to do so. So, you know, that will play out over the course of the year, just as the currency is just a forecast today, and that's going to play out over the course of the year. So it's in the mix. We also have natural hedges, you know, that are involved with some local currency expense.

We will look at that in every market.

Wherever we have opportunity to do so so.

That will play out over the course of the year just as the currency is just a forecast today and thats going to play out over the course of the year. So it is in the mix. We also have natural hedges.

They are involved with some some local currency expense that.

Speaker 4: that will help us over the course of the year that we'll factor in into that map.

Will help us over over the course of the year that will factor in into that now. So overall, we feel it's manageable will do or do our best on on all fronts, Tim you want to talk about.

Speaker 4: So overall, we feel it's manageable to do our.

Speaker 4: do our best on all fronts. Tim, you want to talk about?

Speaker 7: the the channel inventory point. Yeah, absolutely. And when you look at it, you look at our business in 2021, obviously we had very strong out-the-door sales.

The channel inventory point, yeah, absolutely I mean, when you look at it you look at our business in 2024 and 2021, obviously, we had very strong out the door sales.

Speaker 7: And the focus, it's great to be able to record those sales, but the focus of our field sales organization is to make sure that that product gets on the ground.

And the focus it's great to be able to record those sales, but the focus of our field sales organization is to make sure that that product gets on the ground.

Sell it to a distributor has to go through the channel and ultimately get in the hands of our customers and so we track this very closely throughout the season and as we wrap up season is really to understand where we sit across the entire portfolio.

Overall, I'd say, we feel very good about where we sit in terms of inventories in the major markets.

Clearly we're in the <unk>.

Speaker 7: you know, we're in the, you know, towards the tail end of the season in Latin America, and Brazil always gets a lot of interest here, and especially with the strong growth that we've seen across the board in Brazil from a crop protection standpoint. I think our belief right now is that we are seeing some increases in terms of overall industry inventory levels in Brazil, and that's sort of a general statement. It's going to be probably different by segment within the market and geography within Brazil, but as we look at where we sit today, you know, we believe that we are lower than the market overall, and that we're still at a very healthy level for our business in Brazil. So, you know, in terms of, you know, the impact as we go through the season, you know, we'll continue to track that.

Towards the tail end of the season in Latin America, and Brazil always gets a lot a lot of interest here and especially with the strong.

Growth that we've seen across the board in Brazil from a crop protection standpoint, I think our belief right now is that we are seeing.

Some some increases in terms of overall industry inventory levels in Brazil, and that sort of a general statement its going to be probably different by segment within the market and geography within Brazil.

But as we look at where we sit today, we believe that we are lower than the market overall and that we're still at a very healthy level for our business in Brazil. So in terms of the impact as we go through the season, we'll continue to track that as things wrap up in business gets completed on this this part and as we go to the next season, but we still feel like we're in a good spot there.

And in terms of other markets I'd say inventory levels the way I would describe it as from comfortable meaning that there is a kind of a regular or normal amount of inventory in the channel to even being tight we have a lot of business, that's going kind of hand to mouth here. So we've talked about challenges around around supply it's not just cost it's.

Speaker 7: We have a lot of business that's going kind of hand-to-mouth here, so we've talked about challenges around supply, it's not just cost.

Speaker 7: It's also just getting product in the hands of our customers on a timely basis. And, you know, our teams are tremendously focused on that. So we also have segments of the markets where there's very little inventory out there, uncomfortably little inventory that we're working with. So, you know, we're watching it on a daily basis. But as we sit here right now, we do not see this as a limiting factor for our 22 businesses.

Also just getting product in the hands of our customers on a timely basis and our teams are tremendously focused on that so we also have segments of the markets, where where there's very little inventory out there on comfortably little inventory that we're working with so.

We're watching it on a daily basis, but as we as we sit here right now we do not see this as a limiting factor for our 'twenty two business.

Speaker 13: the limiting factor for our 22 business. We'll move to our next question from Frank Mitch at Varium Research. Your line is open, please go ahead. Thank you. You know, as I listened to the commentaries, it seems like there's a lot of positives moving over the next few years on the profit improvement side of things. So I was just wondering, you have a pristine balance sheet. Was there any thought, you know, and you are guiding roughly 800 million in buybacks, plus or minus a couple hundred million this year. Any thought to maybe using that pristine balance sheet?

Okay.

Speaker 1: We'll move to our next question from Frank Mitch at Ferium Research. Your line is open. Please go ahead.

Well move to our next question from Frank Mitsch Fermium Research. Your line is open. Please go ahead.

Thank you.

As I listened to the to the commentary it seems like Theres a lot of positives moving over the next few years on the on the profit improvement side of things. So I was just wondering you have a pristine balance sheet.

Speaker 13: You know, as I listen to the to the commentaries, it seems like there's a lot of positives moving over the next few years on the on the profit improvement side of things. So I was just wondering, you have a pristine balance sheet.

Speaker 10: Was there any thought, and you are guiding roughly $800 million in buybacks, plus or minus a couple hundred million this year, any thought to maybe using that pristine balance sheet and taking out a little debt and adding to the buybacks ahead of all of the profit growth that you guys are talking about?

Was there any thought.

And you are guiding roughly $800 million in buybacks plus or minus a couple of hundred million. This year any thought to maybe using a pristine balance sheet and.

And taking a little debt.

Adding to the buybacks ahead of all of the all of the profit growth that you guys are talking about.

Speaker 4: So let me just give a little perspective and then I'll turn it over to Chuck for his commentary. It's a really good question. I think to give you some perspective and we just...

So let me let me just give a little perspective, and then I'll turn to turn it over to Chuck for his commentary. It's a really it's a really good question I think that gives you some perspective and we just chatted.

Speaker 4: I chatted about this a little bit earlier today in terms of just looking at the math. When you look at the cash flow over the last two years, Frank, if you use the midpoint of our guide for this year, the $1.4 billion, that adds to $3.6 billion. So in other words, the $21.5 billion from 2021 combined with the midpoint of our current guidance.

Chatted about this a little bit earlier today in terms of just looking at the math when you look at the cash flow over the last two years, Frank if you use the midpoint of our guide for this year the $1 billion $4 50.

That adds to $3 6 billion. So in other words, the $21 50 from from 2021 combined with the mid point of our current guidance. If you use the midpoint again of our guide you referenced at $800 million of share buyback that would some too.

Speaker 4: If you use the midpoint again of our guide, you referenced it, 800 million of share buyback. That would sum to a total of 2.55 over the two years, 2.55 billion when combined with 800 million of dividends. So 1.75 in share buyback, 800 million in dividend gives you the 2.55, which is about 70%.

A total of 255 over the two years two five.

$1 billion, when combined with 800 million of dividends, so $1 75 and share buyback $800 million in dividends gives you the $2 five five which is about 70%.

Speaker 11: of the $3.6 billion. So it obviously reinforces what we've stated in terms of our commitment to return cash to shareholders. I'll let, then, Chuck really give a strategic lens, you know, against that backdrop. Yeah, Frank, so it's a good question, and certainly when I think about the balance sheet

Of the three 6 billion. So it obviously reinforces what we've stated in terms of our commitment to return cash to shareholders. OLED, then Chuck really give a strategic lens against that backdrop.

So it's a good question and certainly when I think about the balance sheet.

Speaker 11: It's a strategic asset, we're going to be disciplined of course, but we're going to put it to work to drive long-term shareholder value.

It's a strategic asset we're going to be disciplined of course.

But we're going to put it to work to drive long term shareholder value. It is clean like you mentioned.

Speaker 11: It is clean, like you mentioned, it can, you know, certainly, when I think about the financial horsepower that this company has with the balance sheet plus what we generate from a free cash flow perspective, we have a lot of opportunity to do both, right? We're in a really positive position where we can invest for EBITDA and margin expansion.

Certainly.

When I think about the financial horsepower that this company has with the balance sheet plus what we generate from a free cash flow perspective, we have a lot of opportunity to do both right. We are in a really positive position, where we can invest for EBITDA and margin expansion and we could return significant capital to shareholders through dividends and buy.

Speaker 11: and we could return significant capital to shareholders through dividends and buybacks.

Backs. So we're working with the board to figure out what that formula exactly looks like there'll be more to come on that the other thing I'll just introduces that I believe that we need a good M&A capability inside of core Teva. It is something that I'm looking at quite carefully again, we will be disciplined we will do M&A to drive earnings to drive margin and ROIC.

Speaker 11: So we're working with the board to figure out what that formula exactly looks like.

Speaker 6: There'll be more to come on that. The other thing I'll just introduce is that I believe that we need a good M&A capability inside of Corteva. It is something that I'm looking at quite carefully. Again, we will be disciplined.

Speaker 6: We will do M&A to drive earnings, to drive margin in ROIC. But that is something when we went for finished with our look at our global portfolio and how our asset footprint looks around the world. If there's some gaps, we'll either look to build it or to buy it. So we've got just an exciting future when it comes to using not only the operational capability, but the balance sheet that we have in the company.

But that is something when we went for finished with our look at our global portfolio and how our asset footprint looks around the world. If theres. Some gaps we will either look to build it or to buy it. So we've got an exciting future when it comes to using not only the operational capability, but the balance sheet that we have in the company.

Speaker 1: And that was our final question for today's call. I'll now turn the conference back to Mr. Jeff Rudolph for any additional or closing comments.

And that was our final question for today's call I'll now turn the conference back to Mr. Jeff Rudolph for any additional or closing comments.

Speaker 2: Thank you. That concludes today's call. The Invest Relations team is here for your follow-up questions, so we look forward to those. We thank you for your interesting core tip and wish you a great day. Thank you very much.

Thank you that concludes today's call the Investor Relations team is here for your follow up question. So we look forward to those we thank you for your interest in <unk> and wish you a great day. Thank you very much.

Thank you and again, ladies and gentlemen that does conclude today's call. You may disconnect at this time and have a great day.

Speaker 1: Thank you. And again, ladies and gentlemen, that does conclude today's call. You may disconnect at this time and have a great day.