Q2 2025 Corteva Inc Earnings Call

August 7, 2025

Initial prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time. Please press star followed by one on your telephone keypad. Thank you I'd now like to hand, the call over to Kim Booth, Vice President Investor Relations. You May now go ahead. Please.

Good morning, and welcome to the <unk> second quarter and first half 2025 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer, and David Johnson, Executive Vice President and Chief Financial Officer. Additionally, Jud Oconnor Executive Vice President.

Seed business unit, and Robert King Executive Vice President crop protection business unit will join the Q&A session.

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

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

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

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.

Now my pleasure to turn the call over to Chuck.

Thanks, Kim and good morning, everyone and thanks for joining US we plan to update you today on our second quarter and first half performance share our expectations for the second half of this year and provide some early thoughts on 2026.

In the second quarter recovered delivered top and bottom line growth and more than 200 basis points of operating EBITDA margin expansion.

For both the quarter and the half we saw a net improvement in price volume and cost.

Versus the same period last year.

This should tell you two things first.

There is strong demand for our proprietary technology as our growth platforms continue to deliver and second our operational excellence initiatives are creating value.

In fact, we exceeded our 2025 net cost improvement target in the first half alone, allowing us to raise our full year target.

$450 million from $400 million.

Feed continued its impressive performance in the first half of the year.

With 280 basis points of operating EBITDA margin expansion.

Pricing gains in most regions.

The volume improvement we delivered in North America made a significant contribution to <unk> first half results.

We also feel confident that we delivered healthy branded share gains in both corn and soybeans.

This should tell you 2 things first. There is strong demand for our proprietary technology. As our growth platforms, continue to deliver and second our operational excellence initiatives are creating value

This is a testament to the pioneer business model and the strength of our product portfolio.

Our outperformance in North America was also visible in our first half out licensing results, where we achieved a $70 million benefit net royalties versus prior year exceeding our own expectations of a $65 million net benefit for the full year.

Turning to our crop protection business as the results made clear our technology remains critical to farmer productivity.

Our global operations are also becoming more efficient which contributed to over 350 basis points of operating EBITDA margin expansion for the half.

Productivity and deflation benefits as well as volume gains drove the largest improvements in crop protection solid first half performance.

The volume improvement was most significant in Brazil, where we saw strong applications on additional planted area.

As well as expansion in our direct sales channel.

Though the industry is expected to be about flattish overall for the year.

Our CP business continues to navigate a competitive market and.

And we expect low to mid single digit pricing headwinds in the second half of the year.

However, it's worth noting that this is now our fifth consecutive quarter of CP volume gains with double digit volume growth in the second quarter.

So we are confident we have the right channel strategy and that pricing remains the key constraint to the industry getting back to its normal low single digit organic growth rate.

For for Teva as a whole we remain on track for double digit bottom line growth and meaningful margin improvement.

In fact as you saw from our announcement at.

As a result of our record first half performance and de risked expectations of modest growth in the second half we are raising the midpoint of our full year operating EBITDA guidance to $3 8 billion, a $100 million improvement versus what we guided last quarter.

We're also improving a favorable update on free cash flow expectations in forecasting our full year conversion rate of about 50%.

David will go into more detail on all of this in a moment, including our latest views on tariffs and how these updates fall within our 2027 financial framework.

Turning now to the market outlook.

Overall AG fundamentals remain mixed demand for grains, and oilseeds continues to grow as farmers prioritize top tier seed and crop protection technologies to maximize their yields however, overall crop prices and margins have moderated.

The U S mix shifts from soybeans to corn played out as expected and corn futures reflect the fact that crop condition ratings have been running above five year averages.

Time will tell but the market is certainly expecting a record harvest in the U S.

We all know that the technology keeps getting better and farmers know how to produce more every year.

But what is just as important is that global production continues to keep pace with record setting global consumption.

So much so the stocks to use ratio for corn is expected to remain below historical averages.

Even considering this year's big crop.

We're getting close to harvest here in North America.

And opening up global markets to allow for trade of these critically needed crops would help American farmers continue to feed the world.

Regarding AG policy, we're seeing positive signals on the Biofuels front corn ethanol in Brazil, now accounts for 20% of the country's total ethanol production.

And in the U S. The Epa's 2026 renewable fuel standard proposal should spur additional demand for soybeans.

Gene editing, we remain optimistic that policy proposals in the EU for this critically important technology.

By the end of the year.

We're also encouraged by the fact that the new tax Bill include several changes that provide additional support for farmers in this.

Very important industry.

Finally, a few comments on 2026.

It's still early and we need to see how the full year plays out, but we remain constructive on our views for growth next year and we are on a path that would keep us well within our 2027 framework, which was set last November.

We feel good about what we can control investing and executing on our growth platforms as well as delivering meaningful royalty productivity and cost benefits on a year over year basis.

We'll also provide more detail on our views of 2026 on our third quarter earnings call in November.

In the meantime, we will continue to deliver top tier technology.

<unk> farmers, a competitive edge in achieving higher yields and greater sustainability in every acre they plant.

Let me turn it over to David for more detailed insight into our financial results and outlook.

Thanks, Doug and welcome everyone to the call.

Let's start on slide six which provides the financial results for the quarter and the half.

Sales and operating EBITDA for both the quarter and half were up versus prior year and better than our latest estimate driven by a strong finish to north American season, and continued execution on controlling the controllable.

Briefly touching on the quarter organic sales were up 7% compared to prior year with gains in both seed and crop protection.

Pricing for the quarter was up 1% with gains in seed partially offset by continued pressure in crop protection.

Second quarter volumes were up 6% with see gains in nearly every region and double digit crop protection volume growth led by Latin America.

Top line growth and meaningful cost improvement translated into operating EBIT growth of 13% in the quarter and 215 basis points of margin expansion compared to prior year.

Focusing on the half organic sales were up 5% over last year again with growth in both seed and crop protection.

The continuation of the price for value strategy, along with increased corn acres and market share gains in North America drove seed price and oil and gained a 3% and 2% respectively.

Crop protection price was down 2%.

And as expected driven.

Driven by competitive market dynamics, mostly in Brazil.

Crop protection volume was up 8% with gains in nearly every region.

<unk>, new products, and biologicals delivered double digit volume gains compared to prior year.

Operating EBITDA was up 14% over prior year.

Operating EBITDA margin of nearly 31% was up about 300 basis points driven by organic sales growth, coupled with significant benefits from lower input cost and productivity.

Moving onto slide seven for a summary of the first half operating EBITDA performance.

Operating EBITDA was up more than $400 million to just over 335 billion.

Price and mix volume gains and cost benefits more than offset currency headwinds.

So he continues to make progress on its path to royalty neutrality with about $70 million in reduced net royalty expense.

This improvement was driven by increase out licensing income in North American corn, and lower royalty expense in soybeans.

Seeds and crop protection combined to deliver more than $400 million in productivity and cost benefits, including lower seed commodity costs.

We're all material deflation and continued productivity actions.

In the first half SG&A was up compared to prior year driven by higher commissions.

Compensation expense and bad debt.

This increased investment in R&D aligns with our target and is on track to reach 8% of sales for the full year.

As expected currency was roughly $150 million headwind on EBITDA.

By the Turkish Lira and Canadian dollar.

Both seed and crop protection had an impressive first half performance and delivered double digit EBITDA growth and meaningful margin expansion over prior year.

With that let's go to slide eight and transitioned to the updated outlook for the year.

Our updated 2025 guidance reflects the strength of our first half execution and continued confidence in delivering the second half.

We now expect operating EBITDA in the range of $3 75 to $3 85 billion Rep.

Representing 13% growth at the midpoint.

This increase was driven by broad based organic sales momentum and incremental cost improvement benefits.

While the majority of cost actions are realized in the first half we anticipate continued gains in the back half.

As a result, we now expect operating EBITA margin expansion of approximately 150 basis points, reaching the upper end of our prior range.

We're also raising our operating EPS guidance to $3 to $3 20 per share.

21% at the midpoint versus last year.

This reflects stronger EBITDA performance and lower than expected net interest expense.

Finally, we are increasing our free cash flow guidance to approximately $1 9 billion with a cash conversion rate of about 50%.

This improvement is primarily driven by earnings growth and lower cash taxes from recent legislation.

We're keeping an eye on a few items as we head into the second half, specifically farmer economics and liquidity as they influence the amount of prepaid deposits we received in the fourth quarter.

Let's turn to slide nine to walk through the key drivers of our first half performance and the setup for the second half of the year.

In the first half we delivered strong execution across both seed and crop protection.

North America see performance was particularly strong supported by increased corn acreage market share gains and favorable weather.

We saw low single digit price gains in seed or crop protection pricing was down modestly reflecting ongoing competitive dynamics.

We captured meaningful benefits from controllable levers, namely productivity actions, the raw material cost savings, which more than offset SG&A increases tied to commissions compensation and bad debt.

Currency remained a headwind primarily driven by Turkish lira in Canadian dollars.

Looking ahead to the second half our assumptions remain consistent with what we shared in May.

We expect corn acreage to increase in both Brazil, and Argentina supporting volume growth in both businesses.

Volume growth in crop protection are expected to remain strong, particularly in new products and biologicals.

On pricing, we anticipate low single digit gains in seed and low to mid single digit declines in crop protection.

That said the magnitude of cost and productivity benefits will moderate in the second half as we lap the deflationary impacts we saw in the second half of 2024 for crop protection.

Finally, we expect a currency headwind from the Brazilian real due to hedge impacts.

Our first half second half operating EBITDA split is expected to be aligned with our historical average.

As a reminder, we anticipate a typical seasonal earnings pattern with a third quarter operating EBITDA loss at least as large as what we saw last year.

In all second half earnings delivered in the fourth quarter.

This is after dialing in an expectation that crop protection second half EBITDA will be down high single digits.

And in an exceptionally strong second half in the prior year.

Overall, we still remain on track for mid single digit growth in the second half.

With that let's go to slide 10 to summarize the key takeaways.

First while we still have half of the year left to go we delivered a strong first half ahead of expectations.

Organic sales growth was driven by our leading North America, corn portfolio and broad based volume growth for crop protection.

We delivered over $400 million in cost savings from lower seed and crop protection of raw material costs, along with productivity actions.

The combination of organic sales growth in both business units $70 million in net royalty improvement enhancements in our product mix contributed to about 300 basis point margin expansion over the prior year.

Given our strong first half performance continued confidence in second half we've raised our full year 2025 outlook across all key financial metrics.

And finally, we remain on track for $1 billion of share repurchases in 2025.

We also announced the nearly 6% increase in the annual dividend our fifth consecutive annual increase consistent with our dividend growth strategy.

Combined this translates to roughly $1 5 billion of cash returned to shareholders. During 2025, a testament to the strength of our balance sheet and cash flow outlook.

With that let me turn it back to Kim.

Thanks, David now lets move onto 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.

Now opening the floor for question and answer session, if you'd like to ask a question. Please press star followed by one on your telephone keypad. Please limit your one question each.

Limit to one question only.

Your first question comes from the line of zinc ship and Trish.

Stanley Your line is now open.

Thank you and good morning, everyone, just sort of distilling the prepared comments down it seems like therefore sort of item for the back half that are really factoring into your forecast.

And that you have sort of a focal point on one would just be the tough comp and the negative pricing in Brazil, and obviously, Brazil is a big part of the back half it seems like and I would like to hear more about the seed acreage expectations.

For the back half and how much you think they can be up year over year, and then on a cash flow perspective, the prepays and whether they come in and then obviously what happens with FX.

If you put all that together is that does that sort of how youre thinking about the range of outcomes in the back half and whether you're at the low end or the high end and.

And potentially above the high end.

Yeah.

Okay.

Yes. Good morning, it's David Yeah, pretty much I think you summed it up pretty well I mean, when we look at the year over year in the back half and I, just remind everyone that I know you know this but our back half typically is only 12 or 13% of our entire EBITDA for the year. So.

For the back half and how much you think that can be up year over year, and then on a cash flow perspective, the prepays and whether they come in and then obviously what happens with FX. So if you put all that together is that is that sort of how youre thinking about the range of outcomes in the back half and whether youre at the low end or the high end and potentially.

This year, we haven't kind of lined up very much in line with what we've done in prior years when.

When you look at the plus minus on crop protection. They did have a very strong second half last year. So we're lapping that we're also lapping some of the cost deflation. We already saw in the second half of last year and then we as you mentioned the price declines and then we also have the FX impact, which is a little bit two thirds.

Potentially above the high end.

Yeah.

Yes. Good morning. This is David yes, pretty much I think you summed it up pretty well I mean, when we look at the year over year in the back half.

To remind everyone that I know you know this but our back half typically is only 12 or 13% of our entire EBITDA for the year. So.

70% allocated to CP, just given there their product flows and then regarding acreage I don't know, Doug if you want to pick up the acreage receipt.

This year, we haven't kind of lined up very much in line with what we've done in prior years.

Yes, Vincent I think it's fair to say, we're looking at mid single digit acreage increases for summer what youll start going into the ground here in October as well as as we move into Sapremia, which a big portion of those <unk> orders for that will go into the ground and 26 will be realized here.

At the end of 2025 from a revenue recognition standpoint, when growers take possession, we also see a little bit of a rebound mid single digits, we're confident about maybe a little more in Argentina.

70% allocated to CP, just given their product flows and then regarding acreage I don't know, Doug if you want to pick up the acreage receipt.

Yes, Vincent I think it's fair to say, we're looking at mid single digit acreage increases for summer, which youll start going into the ground here in October as well as as we move into Sapremia, which a big portion of those <unk> orders for that'll go into the ground in 'twenty six will be realized here.

Coming off the down acres that we saw in 24 in the first part of 'twenty five so shouldnt be in a strong position acreage wise and planted area wise I should say Hector wise and planned or otherwise in Latin America.

Next question comes from the line of Joel Jackson with BMO. Your line is now open.

Hi, good morning, Thanks for the update I want to ask what the free cash flow conversion of free cash flow guidance I mean, obviously on the $100 million EBITDA raised.

Free cash flow by $300 million, the conversions better talking about what's going on specifically there.

Coming off the down acres that we saw in 'twenty four and the first part of 'twenty five so should be in a strong position acreage wise and planted area wise I should say Hector wise and planted area wise in Latin America.

And then the second question is $100 million.

EBITDA increase here.

Chuck can you sort of alluded clinical 26.

Some of that can we assume you may have gone in 2020 600 million boost here, maybe just think about how you think about it if your board and our board, but a little early advance on some earnings in 'twenty six.

Next question comes from the line of Joel Jackson with BMO. Your line is now open.

Hi, good morning, Thanks for the update I want to ask what the free cash flow conversion of free cash flow guidance I mean, obviously on a $100 million EBITDA raised.

Okay. So yes, so we'll have David talk about I'll do the cash flow and I can come back and give you a perspective on 26 right. So if we look at where we are right now with cash generation through the first half were $900 million.

Free cash flow by $300 million in the conversions better talking about what's going on specifically there.

And then the second question is $100 million.

Head of last year, and we expect as you mentioned the free cash flow of somewhere around the $1 9 billion. So the adjustment to the overall guide is really twofold. One is our earnings increase that we increased the midpoint of our guide, but also with the new tax legislation, we are expecting less cash tax.

EBITDA increase here.

Chuck can you sort of alluded political 'twenty six.

Some of that can we assume you may have gone in 2020 $600 million boost here, maybe just think about how you think about it if your board and our board early advance on some earnings in 'twenty six.

Okay. So yes so.

<unk> in 2025 and that represents about a 4% uplift in our overall conversion rate. So when you end up adding those two factors together, we're now expecting about a 50% conversion rate for the year of $1 9 billion.

We'll have David talk about I'll do the cash flow and I can come back and give you a perspective on 26 right. So if we look at where we are right now with cash generation through the first half were $900 million ahead of last year and we expect as you mentioned the free cash flow somewhere around the $1 9 billion.

I will remind everyone that in the way that looks on our balance sheet is not that we're accumulating cash on the balance sheet really represents itself and are lowering our needs for borrowing more CP and so in the first half youll see that we borrowed a lot less commercial paper.

So the adjustment to the overall guide is really twofold, one is our earnings increase.

We increased the midpoint of our guide, but also with the new tax legislation, we are expecting less cash taxes in 2025 and that represents about a 4% uplift in our overall conversion rate. So when you end up adding those two factors together, we're now expecting about 50%.

<unk> in lower interest expense and Thats one of the major drivers of our overall first half EPS increase.

Also reminded everyone that are $1 $9 billion is very much dependent.

Dependent on our cash credit mix at the end of the year, we have dialed in the number that it's very similar to past years. So as you know, we'll keep our eye on that as we progress through the fourth quarter.

Conversion rate for the year of $1 9 billion.

Yes, and Joel it's Chuck.

Talking about 2026, it it's a little early I would say right to your question no. There's been no pull forward from 2006 and the 25.

And that's one of the major drivers of our overall first half EPS increase.

I'll just take everybody back to the financial framework, we set last November.

Im also reminded everyone that are $1 $9 billion is very much depends.

On an EBITDA basis, we're trying to deliver $1 billion increase over three years. This guide range now at.

Dependent on our cash credit mix at the end of the year, we have dialed in the number that it's very similar to past years. So as you know we will keep our eye on that as we progress through the fourth quarter.

When we moved it from three seven to three eight from a midpoint perspective were right within that framework.

And if you look at the levers that we're pulling to create that $1 billion. They're the same things. We've always talked about there are the three primary growth platforms. So youre seeing really good growth in seed out licensing our biologicals business and our CP new products. They are delivering they delivered a little.

Yes, and Joel it's Chuck.

Talking about 2026, it it's a little early I would say right to your question, though theres been no pull forward from 2006 and the 25.

I will just take everybody back to the financial framework, we set last November.

On an EBITDA basis, we're trying to deliver $1 billion increase over three years. This guide range now.

More across the board in the first half we feel good about the next two to three years, and then cost and productivity, which is really I think one of the main headlines for this first half.

When we moved it from three seven to three eight from a midpoint perspective were right within that framework.

Both the CP business in the seed business almost equally are pulling every productivity lever. They can we've got a multi year program. As you know we're looking at kind of restructuring assets in CP and we're really looking at the production and automation of our seed production and you can see for the first half 400.

We've raised that amount of $4 50 for the full year.

More across the board in the first half we feel good about the next two to three years, and then cost and productivity, which is really I think one of the main headlines for this first half.

And if you look at what we need to deliver through the 2027, it's about $700 million of the $1 billion is going to come out of this bucket.

And if we're at $4 50, we're feeling very very good about that so you put it all together and I would say.

I'm pretty happy with the first half performance.

I think when you think about the second half, it's less relevant for us, but we need to get through Latam, specifically in Brazil the <unk>.

Books are looking very very good I think our cost setup and seed, particularly is great for the second half Latam and it's going to come down to CP pricing, but we're well within the framework for the next two years.

We've raised that now to 450 for the full year.

And if you look at what we need to deliver through the 2027% to about $700 million of the $1 billion is going to come out of this bucket.

And our next question comes from the line of Chris Parkinson.

And if we're at $4 50, we're feeling very very good about that so you put it all together and I'd say.

Wolfe Research your line is now open.

I'm pretty happy with the first half performance.

Thank you so much for taking my question.

It seems on the U S. C price cards are already tricking out from you in certain cases in some of your competitors and it seems like it's indicating low single digits for both corn and soy maybe a little bit healthier on the corn side.

I think when you think about the second half, it's less relevant for us, but we need to get through Latam, specifically in Brazil. The order books are looking very very good.

I think our cost setup and seed, particularly is great for the second half Latam and it is going to come down to CP pricing, but we're well within the framework for the next two years.

Could you just discuss kind of the pricing strategy into.

Into the end of the season and also how does embed and how your expectations on a preliminary basis would embed the ramps are both for seed and power core just given your confidence in those launches as well. Thank you.

The next question comes from the line of Chris Parkinson.

Wolfe Research your line is now open.

Thank you so much for taking my question.

Go ahead Jim.

Yeah.

Okay. Thanks.

Thanks, Chris This is Judd and just.

As we are launching price cards, you've probably seen some of it some of our brands are in the market. We certainly seen some competitors in the market as well.

Could you just discuss kind of the pricing strategy into.

A couple of things from a North America perspective, one mix and mix improvement with more seed empower core number two germplasm performance and the fact that we've continued to bring genetic gain and new hybrids into the lineup.

Go ahead Joe.

Allows us to leverage more price and farmers are more than willing to share in that as we bring higher levels of productivity.

Okay. Thanks.

Thanks, Chris This is Judd and just.

As we are launching price cards, you've probably seen some of it some of our brands are in the market. We certainly seen some competitors in the market as well.

And then there's a little bit of organic price lift in there as well so the combination of those will get us to low single digits.

A couple of things from a north American perspective, one mix and mix improvement with more speed and power core.

Maybe about where we were in 2025, maybe a little more dependent on how the year plays out, but we feel very good about what 26 looks like from a pricing opportunity in their mix.

Number two germplasm performance and the fact that we've continued to bring genetic gain and new hybrids into the lineup that allows us to.

And maybe Chris just a couple of other comments.

So if you look at the first half for seed rate.

EBITDA is up $250 million, 11%.

To leverage more price and farmers are more than willing to share in that as we bring higher levels of productivity.

280 basis points of margin enhancement, and we're seeing market share gains in corn and soybean.

Then theres a little bit of organic price lift in there as well so the combination of those will get us to low single digits.

We're already number one in both of those technologies. So you start thinking about just this business is firing on all cylinders. When you add to the mix, which gets us most exciting is the growth of the out licensing and the potential for that right. So we've already size that in corn and soybeans around the world primarily in North America Latin America.

Maybe about where we were in 2025, maybe a little more dependent on how the year plays out, but we feel very good about what 26 looks like from a pricing opportunity in our mix.

And maybe Chris just a couple of other comments.

So if you look at the first half for seed rate.

$4 billion opportunity, where a relatively small player. We've said we would be royalty neutral by 2028, and then really exciting things happen post 2028, as we get more licensing income because we have more freedom to operate for our technology. So I think we're on this really interesting strategic pivot when it comes to see.

EBITDA is up $250 million, 111%.

With 280 basis points of margin enhancement, and we are seeing market share gains in corn and soybean.

Which we're already number one in both of those technologies. So you start thinking about just this business is firing on all cylinders. When you add to the mix, which gets us most exciting is the growth of the out licensing in the actual the.

But we're not in licensing technology as much as we're out licensing technology.

And that's sort of a long term goal for this business.

For that right. So we've already size that corn and soybeans around the world primarily in North America Latin America.

Your next question comes from billing as Kevin Mccarthy.

A $4 billion opportunity, where a relatively small player. We've said we would be royalty neutral by 2028, and then really exciting things happen post 2028, as we get more licensing income because we have more freedom to operate for our technology. So I think we're on this really interesting strategic pivot when it comes to see.

Research Partners. Your line is now open.

Yes, Thank you and good morning.

To unpack the crop protection volume a little bit I. Appreciate the details that you provide on slide 17, and in particular I want to dive into fungicide, <unk>, which was up 40%.

But we're not in licensing technology as much as we're out licensing technology.

Can you help us understand how much of that was.

And that's sort of a long term goal for this business.

Market related versus your ramp of pickle intimate products. So I think youre still ramping on a track to some degree and more recent launch of <unk> would be the first part of the question and then looking ahead to next year.

Your next question comes from the line of Kevin Mccarthy.

Article Research partners. Your line is now open.

Yes, Thank you and good morning.

Wanted to unpack the crop protection volume a little bit I. Appreciate the details that you provide on slide 17, and in particular I want to dive into fungicide, which was up 40% can you help us understand how much of that was.

You entered into a partnership recently with FMC for the wind up here. So maybe talk about what that might mean for core Teva and Sun. Besides next year.

Okay.

Go ahead Rob.

Kevin This is Robert Thank you.

When you look at fungicides for the first half Yeah, we had a had a good half.

I'll take you back to 2023.

Sure.

Prices really started falling.

Decided not to participate in some of the business there due to really low margins.

You entered into a partnership recently with FMC for flu wind up here. So maybe talk about what that might mean for core Teva and Sun decides next year.

Our strategy has been to.

Take out cost to began to change.

Change, our overall footprint and network and that's working for US and this is a good example of that where.

Okay.

Go ahead Rob.

Kevin This is Robert Thank you.

We now went back into the market.

And at acceptable returns with our <unk> brand and <unk>.

When you look at fungicides for the first half we had a had a good half.

We've been able to get back in the market there in Brazil, and that's been the big uptick of fungicides for us in the first half year is our strategy is playing out and where we are in the market with good volume there.

I'll take you back to 2023.

Sure.

Prices really started falling we.

Decided not to participate in some of the business there due to really low margins.

Looking now to back half of the year and into the future. We did do a deal with with our partner FMC or a competitor FMC.

Our strategy has been to.

Take out cost to begin to change.

Change, our overall footprint and network and that's working for US and this is a good example of that where.

For our brand foreseeable is going to be a.

We now went back into the market.

The new three way fungicide that we've not participated in this market before in <unk>.

And at acceptable returns with our <unk> brand and <unk>.

North America corn, it gives us a premium product to be able to position with our overall portfolio.

We have we have a very good two way approach prima.

But this now gives us a top tier as well.

This is exciting for us and the fact that we think we can scale this and we'll be able to get on a lot more acres to give our farmers more choices as we look forward in our overall portfolio there with <unk>.

Looking now to back half of the year and into the future. We did do a deal with with our partner FMC or a competitor FMC.

For our brand foreseeable is going to be a.

With with fungicides. So it's exciting times as we began to bring some of these new products to market for crop protection. Thank you.

The new three way fungicide that we've not participated in this market before in <unk>.

Yeah.

North America corn, it gives us a premium product to be able to position with our overall portfolio.

Our next question comes from the line of Mitch.

<unk> Research your line is now open.

We have we have a very good two way approach prima.

Good morning, and congratulations on a very strong quarter driven partly by.

But this now gives us a top tier as well.

Share gains I was wondering if you could opine.

On what your expectations were for share gains in both corn and soy and I wonder to what extent given.

The fact that we are looking at a potential record harvest in corn.

With with fungicides. So it's exciting times as we began to bring some of these new products to market for crop protection. Thank you.

Obviously, that's driving the price of the commodity lower.

Chuck how do you feel about what impact that may have on 2026 corn acres.

Yeah.

Next question comes from the line of Frank Mitsch.

<unk> Research your line is now open.

Yeah. So why don't we have Jud talk about performance in the share gains and then I'll come back and talk about the market.

Good morning, and congratulations on a very strong quarter driven partly by.

Yes.

Very good thanks for the question Frank from a share gain perspective, we still have to get to the final numbers in terms of where we landed with acres does feel like the number we have out there with USDA at 95 makes sense. If you look at what our volume is versus where we.

Share gains I was wondering if you could opine.

On what your expectations were for share gains in both corn and soy and I wonder to what extent given.

The fact that we are looking at a potential record harvest in corn.

Obviously, that's driving the price of the commodity lower.

Chuck how do you feel about what impact that may have on 2026 corn acres.

Leave acres are planted we've picked up share in both corn and soy.

Very very strong performance on the soy side with our not only our Z series beans, and our pioneer brand, but our regional anchor brands performing very very high and we are providing our licensees with some of the very best germplasm and product performance in the industry on soy.

Yeah. So why don't we have Jud talk about performance in the share gains and then I'll come back and talk about the market.

Yes.

Very good thanks for the question Frank.

I'm a share gain perspective, we still have to get to the final numbers in terms of where we landed with acres does feel like the number we have out there with USDA at 95.

When you think about power corn seed performance again has allowed us to continue to pick up share and we've clearly taken a leadership position in the above and below ground protected market.

Makes sense.

If you look at what our volume is versus where we believe acres are planted we've picked up share in both corn and soy.

And our our doubles or above growth performance has been exceptional. So we're excited maybe one other piece, our retail partners with Vermont and the initiative and strategic.

Very very strong performance on on the soy side with not only our Z series beans, and our pioneer brand, but our regional anchor brands performing very very high and we are providing our licensees with some of the very best germplasm and product performance in the industry on soy.

Play that we had in terms of entering that retail space space with a premium brand has had tremendous success as well and they picked up some share here in 'twenty five so feel good about where we're at.

When you think about power corn seed performance again has allowed us to continue to pick up share and we've clearly taken a leadership position in the above and below ground protected market.

Frank on the fundamentals. So look if you think about what's happening right.

It's another year of record demand in terms of consumption for grains, and oilseeds and we've had very good production. So production is keeping up with with demand, which is good but stocks to use around the world, especially if you look at corn, it's tight even though the market is expecting a big crop from the U S. In a big crop from <unk>.

And art are doubles or above ground performance has been exceptional. So we're excited maybe one other piece, our retail partners with Vermont and the initiatives and strategic.

Plant play that we had in terms of entering that retail space space with a premium brand has had tremendous success as well and they picked up some share here in 'twenty five so feel good about where we're at yes.

Latam, so it's pretty interesting because you've got relatively low crop pricing today.

But the stocks to use are not going up.

Frank on the fundamentals. So look if you think about what's happening right.

So any wobble here when it comes to either a total production.

It's another year of record demand in terms of consumption for grains, and oilseeds and we've had very good pre.

Or even China buying behavior, because right now, they're not really buying a lot of product yet.

<unk> production is keeping up with with demand, which is good but stocks to use around the world, especially if you look at corn, it's tight even though the market is expecting a big crop from the U S. In a big crop from Latam. So it's pretty interesting because you've got relatively low crop pricing today.

This could actually go the other way and you could see even further strength in the AG fundamentals and so we're watching it very carefully.

So it's a little early to call 2026, but if you look at the futures price today, it would be a flip of a coin right now what what the prevailing thinking is and we would agree with this is that you're probably going to see slightly less corn area.

But the stocks to use are not going up.

So any wobble here when it comes to either.

And probably slightly more soybean area, but the U S is going to plan, a 100 and 180 million acres of both.

Total production or even China buying behavior, because right now theyre not really buying a lot of product yet.

So and I think what what the determining factor will be of course will be economics at the time, but we also have to watch the trade discussions that are happening right now in geopolitics will play into this because we do need some trade routes to open up particularly for soybeans and that will weigh on farmers planting decisions as we get through harvest and into next year. So.

This could actually go the other way and you could see even further strength in the AG fundamentals and so we're watching it very carefully.

Time will tell but that's our current thinking today Frank.

Next question comes from the line of David Begleiter of Deutsche Bank. Your line is now open.

Probably slightly more soybean area, but the U S is going to plan, a 100 and 180 million acres of both.

Thank you good morning.

Chuck just on CP pricing can you talk to what you're seeing in terms of the price of Chinese and Indian generics and overall are you seeing CPC pricing in the back half.

Any worse or just more more stabilized here. Thank you.

Yes.

So why don't I have Robert talk a little bit about what he's seeing in the markets and then I'll come back with just a few high level comments on the CP market generally go ahead Robert.

Time will tell but that's our current thinking today Frank.

Next question comes from the line of David Begleiter of Deutsche Bank. Your line is now open.

Sure David.

C P pricing.

Have you seen we think we'll finish the full year at low single digits.

Thank you good morning.

Chuck just on CP pricing can you talk to what you're seeing in terms of the price of Chinese and Indian generics and overall are you seeing CPC pricing in the back half.

Second half, we're really focusing a lot on Brazil.

I'll take you to before we get to that just the first half.

Any worse or just more more stabilized here. Thank you.

Pricing in all regions was relatively flat with the exception of Brazil.

Yeah.

So why don't I have Robert talk a little bit about what he's seeing in the markets and then I'll come back with just a few high level comments on the CP market generally go ahead Robert.

So <unk>.

Second half of our business is primarily Latin America, Brazil is a big piece. So we're watching this.

And.

Imports are up a little bit in Brazil, but were seasonally high hit it into the headed into the season. The channel is full as expected.

Sure David.

C P pricing.

Have you seen we think we'll finish the full year it at low single digits.

Ample.

Second half, we're really focusing a lot on Brazil.

Supply.

With economics in the area, we're continuing to have pricing pressures with with competition as well. So it's an area that we're watching and but yet as you look at the year over year, as we approach 2026 quarter to quarter or quarter over quarter the pricing improves it is not.

I will take you to before we get to that just the first half.

You know pricing in all regions was relatively flat with exception of Brazil.

And.

So <unk>.

Second half of our business is primarily Latin America, Brazil is a big piece. So we're watching this.

As much of a decrease as it has been in the past and we think it continues to get better as we as we move forward.

And.

Imports are up a little bit in Brazil, but were seasonally high hit it into the headed into the season. The channel is full as expected.

I'm still still bullish on it a little bit because I do think that the pricing does continue to get better as supply tightens up and is as.

Ample.

Supply.

Exports out of China continued to be stable from a pricing standpoint, they are low but they are stable and so those are signs of movement in the right direction Chuck spoke to that yeah. So look David it.

Do you think about the CP market fundamentals overall.

As much of a decrease as it has been in the past and we think it continues to get better as we as we move forward.

We all know, it's a well supplied market.

But it is improving the overall market at least the way we're looking at it is slowly improving and most of the major markets. So that the destocking is well behind US we said that last quarter I think.

I am still still bullish on it a little bit because I do think that the pricing does continue to get better as supply tightens up and as you know.

And we're seeing the channels all channels to be very healthy and then pricing. So we're watching pricing very very carefully in most major markets. It has stabilized and in some markets pricing is starting to go up.

You think about the CP market fundamentals overall.

After several years of declines.

Robert called out Brazil is probably the area, where we have the most concern is probably the most competitive market in the world right now when it comes to CP and we are obviously when we dialed our our thinking into our guide we said that the second half pricing will probably be down low to me.

We all know, it's a well supplied market.

But it is improving the overall market at least the way we're looking at it is slowly improving.

And most of the major markets. So that the Destocking is well behind US we said that last quarter I think.

Mid single digits in Brazil.

But the early signs so if you look at sort of the leading indicators.

On generic pricing for four quarters now in a row.

After several years of declines.

The pricing is stable so it's no longer going down for almost a year.

Robert called out Brazil is probably the area, where we have the most concern is probably the most competitive market in the world right now when it comes to CP and we are obviously when we dialed our thinking into our guide we said that the second half pricing will probably be down low to me.

Which I think is great.

And then production in China, So the inventory in China is actually improving as well, so theres less product that being exported.

So all of that leads me to believe that 2026 should be better than 2025, but we don't have great insight until we get through the first or the second half in Latam.

Mid single digits in Brazil.

But the early signs so if you look at sort of the leading indicators.

Generic pricing for four quarters now in a row.

We'll update the market as we learn more but that's our thinking right now with the CPA fundamentals.

The pricing is stable so it's no longer going down for almost a year.

Our next question comes from the line of Jeffrey Zekauskas JP Morgan. Your line is now open.

Which I think is great.

And then production in China, So the inventory in China is actually improving as well, so theres less product that being exported.

Thanks, very much a two part question can you talk about how tariffs.

So all of that leads me to believe that 2026 should be better than 2025, but we don't have great insight until we get through the first or the second half in Latam.

Have affected your supply chain that is.

Different tariff issues arising what are you doing different in terms of sourcing and in terms of shipping.

And we will update the market as we learn more but that's our thinking right now with the CPA fundamentals.

And for David.

Inventories really look like they're in pretty good shape, where year over year, they're down $600 million and they were down sharply in the first quarter.

Our next question comes from the line of Jeffrey Zekauskas Jpmorgan. Your line is now open.

By the end of the year do you think your inventories will be much slower than they were last year.

Thanks, very much two part question.

Can you talk about how tariffs.

Jeff I'll take the first part of that talk a little bit about what we're doing from a supply network.

Have affected your supply chain that is.

Different tariff issues arising.

Two to work through these challenges.

Are you doing different in terms of sourcing and in terms of shipping.

As you look at the overall supply chain for core Teva.

And for David.

Recall that we started in on this strategy a few years ago to improve our resiliency and in doing that we've been working on increasing our multi sourcing and as you know this is not a fast process.

Inventories really look like they're in pretty good shape, where year over year, they're down $600 million and they were down sharply in the first quarter.

By the end of the year do you think your inventories will be much slower than they were last year.

Regulatory requirements as you as you move up a source you have to get registered and it does take some time, but we're making great progress there and so.

Jeff I'll take the first part of that one talk a little bit about what we're doing from a supply network two to work through these challenges.

From a tariff standpoint, we've been able to navigate in.

The water so far.

I think as you as you look at the overall supply chain for core Teva.

And.

The impact is and we will call it minimal from an overall standpoint, and that's really because our supply chain teams have been hard at work well in advance of this I'd like to say where that smart, but we were ahead of this before it ever started.

Recall that we started in on this strategy a few years ago to improve our resiliency and in doing that we've been working on increasing our multi sourcing and as you know this is not a fast process.

With regulatory requirements as you as you move a source you have to get it registered and it does take some time, but we're making great progress there and so.

And we're in a pretty good position from a multi sourcing standpoint, so we don't see a big issue right now as it stands from what we know today and think we're in a pretty good position to manage these things as we move forward.

From a tariff standpoint, we've been able to navigate in the.

The water so far and.

And Jeff regarding inventory, yes, thanks for pointing out the fact that we are in a very good trajectory. So far in this year, we do expect the back half of the year to add some working capital and we've had a really good run so far in the first half of this year, but by the second half, we expect inventories to be around flat to prior year.

We're ahead of this before it ever started and we're in a pretty good position from a multi sourcing standpoint. So we don't see a big issue right now as it stands from what we know today.

<unk> may be down slightly from where we were in 2024.

Next question comes from the line of Richard got you to narrow.

We're in a pretty good position to manage these things as we move forward.

Wells Fargo. Your line is now open.

Great. Thanks for taking my question.

Chuck given the strong first half of the year and the rest are selling your guys. I was curious your thoughts in terms of where do you think the market is it really surprised you since the Investor day.

You set the targets for this year and then you talked about the.

Year may be down slightly from where we were in 2024.

Yes progressing ahead of schedule on the net royalties as well as on the cost side.

Next question comes from the line of Richard got you to narrow.

Any chance you can see a pull forward in terms of those targets.

$700 million.

Wells Fargo. Your line is now open.

And costs can we get there sooner than originally thought and.

Great. Thanks for taking my question.

Chuck.

Same question in terms of the net royalty neutrality target of 2028, you'll get there ahead of time. Thanks.

Given the strong first half of the year and the ratio of ciliary guys. I was curious your thoughts in terms of where do you think the market is it really surprised you since the Investor day.

Yeah. Good questions. Richard So look on the net royalty we've already pulled it forward right. So it was end of decade 2030 now into 2028, we're feeling very confident around that timeline and I think that the first half performance would be reflective of that at that timeline.

You set the targets for this year and then you talked about the yes, yes.

Progressing ahead of schedule on the net royalties as well as on the cost side.

Any chance you can see a pull forward in terms of those targets.

From an overall market and what has surprised us.

$700 million.

And costs can we get there sooner than originally thought.

Look I think we've all kind of been focused on the growth platforms. The way, we've outlined them and really if you've heard me talk before I'm, a big believer in controlling our controllable and the growth platforms are what we can control. So the new products I think are performing well in CP.

Same question in terms of the net royalty neutrality target of 2028.

They're hesitant.

Thanks.

Yeah. Good questions. Richard So look on the net royalty we've already pulled it forward right. So it was end of decade 2030, now. It's 2028, we're feeling very confident around that timeline and I think that the first half performance would be reflective of that at that timeline.

The out licensing there just seems to be a lot of interest in the major markets to have.

Another set of technology in our in license our.

Hans So I think that that's really good and we're going to go as fast as we possibly can and we've already pulled some of that I think forward a little bit.

From an overall market and what has surprised us.

When you start thinking about the other surprising area, though it is see peak.

But when I look at this year's market being flat.

Our business is going to be going to be up.

And I think that as some of the hard work that Robert just described which is on on the cost and productivity front. So.

The out licensing there just seems to be a lot of interest in the major markets to have.

Where I think we've probably seen.

Another set of technology in and license our.

The market and CPB.

Hans So I think that that's really good and we're going to go as fast as we possibly can and we've already pulled some of that I think forward a little bit.

At the low end for a little longer than we all expected, even though I just said it is getting better and we believe it is getting better I think we've been able to find ways to offset that with the levers we can pull namely on cost and productivity and then leaning into the strength of our technology and so the formula is pretty boring, but it's one that.

When you start thinking about the other surprising area, though it is see peak.

When I look at this year's market being flat.

Our business is going to be going to be up.

He has worked for us and will continue.

And I think that as some of the hard work that Robert just described which is on on the cost and productivity front. So.

I look at the targets all I'll say is that there is a wide range there and we feel comfortable that we're well within that range today and we will continue to update you as we learn more through the business operations.

I think we've probably seen.

The market and CPB.

Our next question comes from the line of Christian <unk>.

Your line is now open.

Hi, Good morning, Thank you for taking the question.

To ask a little bit about your second half speed assumptions and just shifting to Brazil.

That has worked for us and we will continue when I look at the targets. All I'll say is that there is a wide range there and we feel comfortable that we're well within that range today and we will continue to update you as we learn more through the business operations.

Uh huh.

You mentioned the order books are looking healthy can you maybe articulate a little bit more on the velocity of those order books.

And then specifically on your seat assumption. It does look like that that price expectations are maybe down a little bit more I think previously your low to mid single digits now a plus low single digits.

Our next question comes from the line of Christian Owen.

Hi, Lee.

Your line is now open.

Not that easy kind of help us understand the moving pieces around it.

Hi, Good morning, Thank you for taking the question.

Pricing in the back half thanks.

Wanted to ask a little bit about your second half speed assumptions and just shifting to Brazil.

Hi, Christian this is Jed.

And thanks for the question so yeah. It means that for the seed business.

You mentioned the order books are looking healthy can you maybe articulate a little bit more on the velocity of those order books and then specifically on your seat assumption. It does look like that that price expectations are maybe down a little bit more.

Half is really all about Latin America, a couple of things going on there start with Argentina.

We've got some product that shifted out of the first half into the second half is Argentinian growers have gotten to a just in time type purchase pattern credit has been somewhat of an issue and with currency more stabilized you can see the Argentinian farmer, just buying closer to when they actually need it versus.

Previously you were at low to mid single digits, plus low single digits.

Just not that easy kind of help us understand the moving pieces around it.

Pricing in the back half thanks.

It's been a few years, where they were purchasing well well in advance whether their need was because of some currency hedge.

Hi, Christian this is judd.

And thanks for the question so yeah. It means that for the seed business.

So we feel good about area recovery, we feel good about our current position.

Second half is really all about Latin America, a couple of things going on there start with Argentina.

Full transparency our product portfolio in Argentina is not where we want it to be today, we've got we've made great progress.

But it's going to take us another year to bring products through the pipeline, we feel good about where what we've got coming but we're there.

The team is doing a great job of finding their way on the right acre, where we can perform for farmers.

Theres been a few years, where they were purchasing well well in advance whether their need was because of some currency hedge.

But we've got a little bit of a gap we're working on.

So we moved to Brazil.

If you look at the summer crop, we've got right at 90% of the orders in hand, and we're sitting almost 40% of orders in hand first of freemium, which is unusually well ahead of pace for this point in time as far as far ahead as we've ever been for whatever reasons and we've got <unk> 2 million.

So we feel good about area recovery, we feel good about our current position.

Full transparency our product portfolio in Argentina is not where we want it to be today, we've got we've made great progress.

But it's going to take us another year to bring products through the pipeline, we feel good about where what we've got coming but we're there.

Front for products that they're going to plant in January.

So we feel good about that low single digits feels about right from a pricing perspective, it's very very very competitive market.

The team is doing a great job of finding their way on the right acre, where we can perform for farmers.

But we've got a little bit of a gap we're working on.

Two months ago, there was a really strong corn position with local market prices and demand that's softened a bit but it's still very good. So we expect mid single digit increases in summer acres as well as Sabrina acres, maybe one point to add we've seen summary.

So we moved to Brazil.

If you look at the summer crop, we've got right at 90% of the orders in hand, and we're sitting almost 40% of orders in hand, first a freemium, which is unusually well ahead of pace for this point in time as far as far ahead as we've ever been for whatever reasons, We've got gross commission.

<unk>.

Some are planted area declining four.

Front for product that they're going to plant in January.

Number of years, so the last decade, or so and it's just now that we're starting to see on that planetary increase for summer crop as well so.

So we feel good about that low single digits feels about right from a pricing perspective, it's very very very competitive market.

Good picture now we have to execute thanks for your question.

Two months ago, there was a really strong corn position.

Next question comes from the line of <unk> of Keybanc capital markets. Your line is now open.

Local market prices and demand that's softened a bit but it's still very good. So we expect mid single digit increases in summer acres as well as Sabrina acres, maybe one point to add we've seen summer acres planted.

Thanks Ben.

You mentioned some upward movement.

Eric practices somewhat restricted production. There are you seeing any interest in your products as an alternative to China generics, maybe somewhere else in the world.

Planted area declining four.

A number of years for the last decade, or so and it's just now that we're starting to see on that planetary increase for summer crop as well so.

Okay.

Good picture now we have to execute thanks for your question.

Hey, Alex Thanks for the question.

When you think about China.

Next question comes from the line of <unk> of Keybanc capital markets. Your line is now open.

There's a few things going on here first.

Sure.

Let's go back to a little bit of where we had a lot of excess production I believe what Chuck referring to there is we feel like production is tightening up getting back to more more imbalanced move in that direction.

Thanks, Good morning, you mentioned some upward movement.

Prices are.

Somewhat restricted production there are you seeing any interest in your products as an alternative to China generics, maybe somewhere else in the world.

As far as the exports go.

Most of it is impacting Latin America right now.

We are starting to see a little bit into eastern.

Okay.

Alex Thanks for the question.

Europe, but it's manageable and not that much different than normal. It just has a little more noise because of just the climate of the world.

Yeah.

When you think about China.

A few things going on here first.

Let's go back to a little bit of where we had a lot of excess production I believe what Chuck referring to there is we feel like production is tightening up giving back more more imbalanced move in that direction.

But primarily it's a Latin America phenomenon Asia has always been a big generic market. So it's nothing new there.

So our focus is really on Latin America. The other other regions are about normal.

As far as the exports go.

And we don't see any big Disruptors happening in those regions I think the one key thing to call out is we don't go head to head with the generics you don't have to we have different customer base.

Most of it is impacting Latin America right now.

We are starting to see a little bit into eastern.

Europe, but it's manageable and not that much different than normal. It just has a little more noise because of just the climate of the world, but primarily it's a Latin America phenomenon Asia has always been a big generic market. So it's nothing new there.

And usually the customers that we're selling to we have a direct model as you know we rely on that a lot.

And the customers that we're selling to want differentiated technology.

The generics do though is they provide the floor and so if the floor is stable that helps everybody.

So our focus is really on Latin America. The other other regions are about normal.

So it's less of a competitive issue for us and a substitution of product, but it helps to understand sort of the overall health of the market.

We don't see any big Disruptors happening in those regions I think the one key thing to call out is we don't go head to head with the generics.

Question comes from the line of Matthew Gaea.

In half two we have different customer base and usually the customers that we're selling to.

<unk> of America. Your line is now open.

We have a direct model as you know we rely on that a lot and the customers that we're selling to want differentiated technology, what the generics do though is they provide the floor and so if the floor is stable that helps everybody.

Thanks.

Morning.

I have two.

First of all I can guess what your answer is going to be here, but would you say you benefited at all from the absence of dicamba this year and.

Your thoughts on the potential return next year, given some new registrations, maybe moving through the pipe and then as.

So it's less of a competitive issue for us and a substitution of product, but it helps to understand sort of the overall health of the market.

As we look at the margin in CP.

Year over year, it's pretty impressive and you discussed a lot of the productivity benefits are resonating here. So if we think about how that margin should translate to <unk>.

Question comes from the line of Matthew deal.

<unk> of America. Your line is now open.

Can we keep a lot of this traction or are there going to.

Thanks.

Morning.

Going to be give backs here, depending on like mix.

I have two.

First of all I can guess what your answer is going to be here, but would you say you benefited at all from the absence of dicamba this year and.

Okay, well, let's start with Jud for dicamba.

Okay. Thank you Mathew, yes, maybe just a few comments EPA did take an action here at the end of July There's a 30 day comment period on a potential return of a dive Campbell label.

Your thoughts on the potential return next year, given some new registrations, maybe moving through the pipe and then as.

As we look at the margin in CP.

And so we'll see how that goes how restricted the label is or not.

Year over year, it's pretty impressive and you discussed a lot of the productivity benefits are resonating here. So if we think about how that margin should translate to <unk>.

If that will be available for <unk>, let me just put it.

Maybe a sidebar coming here, we advocate for growers, having all the tools that they need to be productive and manage their crop so that being said if.

Can we keep a lot of this traction or are there going to.

We're gonna be give backs here, depending on like mix.

Okay, well, let's start with Jud for dicamba.

If you think about.

How.

Okay. Thank you Mathew, yes, maybe just a few comments EPA did take an action here at the end of July There's a 30 day comment period on a potential return of a dike Campbell label.

<unk> and enlist entered the market, we were making big penetration and market share gains Wilder Campbell was still.

Still labeled and so when we lost the label for Dicamba I'm sure that there was a bump there to some degree, but we still had dicamba resistant beans that we're going in the ground and just choosing different herbicide packages.

And so we will see how that goes how restricted the label is or not.

And if that will be available for <unk>, Let me just put it maybe a sidebar coming here, we advocate for growers, having all the tools that they need to be productive and manage their crop so that being said.

So.

I guess, we don't have any big concerns that Campbell label return is going to have any material impact that we're going to have to deal with <unk>.

If you think about.

How E three and enlist entered the market, we were making big penetration and market share gains while Dr. Campbell was still.

<unk> Plaza still matters and is a really big deal.

Performance in our germplasm on the soy side is best in class best in the industry right now in North America.

Still labeled and so when we lost the label for Dicamba I'm sure that we that there was a bump there to some degree.

And I think that our all of our brands and licensees would agree with that we're sitting again, just north of 65% penetration with enlist.

But we still had dicamba resistant beans that we're going in the ground and just choosing different herbicide packages.

Heavy weed.

So yes I.

Control season with all the range that we had in multiple flushes weeds. So we believe that our.

I guess, we don't have any big concerns that a dicamba label return is going to have any <unk>.

That our spray rate is still 70% or above we will see when the murder research shakes out on that but.

The material impact that we're going to have to deal with <unk>.

<unk> Plaza still matters and is a really big deal.

Probably more than you wanted for for the dike can be answered, but we feel like we're in a strong position, we can compete well going into 'twenty six and beyond.

Performance in our germ plasm on the soy side is best in class best in the industry right now in North America.

And I think that our all of our brands and licensees would agree with that we're sitting again, just north of 65% penetration with enlist.

Next question.

That's correct.

Go ahead, Robert answer the margin question. So on the on the <unk> margin.

Heavy weed.

Let's talk a little bit about how.

Control season with all the range that we had in multiple flushes weeds. So we believe that our.

How do we see is tracking to the 2027 deliverables and what that looks like.

<unk>.

That our spray rate is still 70% or above we will see when the murder research shakes out on that but.

First of all if you recall last year, we put more money on the table from a cost reduction standpoint.

More than you wanted for for the dike can be answered, but we feel like we're in a strong position, we can compete well going into 'twenty six and beyond.

To deliver by 2027 will be will be in the neighborhood of $300 million.

And that work is continuing so as you build out the margins we are continuing to get to a capital light lower manufacturing cost based on what we've been in the past and we think that continues to help us with margins as we move forward into the future.

Next question.

That's correct.

Go ahead, Robert answer the margin question. So on the on the CP margin.

Let's talk a little bit about how we how we see us tracking to the 2027 deliverables and what that looks like.

Said before a lot of work will started there early and we're continuing that as we look forward.

First of all if you recall last year, we put more money on the table from a cost reduction standpoint.

The other thing I would think about when I talk about margins for this business is really our growth platforms of new products and biologicals keep in mind that when you think about our differentiated portfolio, where about two thirds a little over two thirds differentiated in our portfolio and what that means for us is in that.

To deliver about 2027 will be will be in the neighborhood of $300 million.

Part of our portfolio, our gross margin is somewhere about 15% above our overall average.

Said before a lot of work will started there early and we're continuing that as we look forward.

That gives us good uplift and that's where our technology laws now as Chuck talked earlier, there is a lot of demand for our technology farming is getting harder.

And.

Farmers need more tools to be able to combat all the things. They are seeing there is a lot of resistance growing.

And weeds pass are increasing especially in Latin America, it's getting more intense.

Part of our portfolio.

<unk>.

And.

Our gross margin is somewhere about 15% above our overall average.

There are new things showing up so I'll talk you through a couple of things that we're going to be launching her visa soybean rust.

That gives us good uplift and that's where our technology laws and as Chuck talked earlier, there is a lot of demand for our technology farming is getting harder.

That'll be launching in Brazil. This is a this is a major market for us.

I think this is a blockbuster molecule that will peak out around 500 as peak revenue.

And.

The farmers need more tools to be able to combat all the things they are seeing.

And so we're bringing new technology over the next few years reclamation. Another one that we just launched but we just got.

There is a lot of resistance growing.

And weeds paths are increasing especially in Latin America, it's getting more intense.

Permitting for it in California.

And this is on the motto side that is novel from a standpoint that it it is selective with the.

And.

There are new things showing up so I'll talk you through a couple of things that we're going to be launching visa soybean rust.

Bad <unk> and keeps all the good things in the soil. So.

Product that'll be launching in Brazil. This is a this is a major market.

Again, new technology that adds value on the farm that is helping not only our margins, but man, it's helping the farmers and their returns as they grow and then biologicals.

For us we.

We think this is a blockbuster molecule that will peak out around 500 as peak revenue.

And so we're bringing new technology over the next few years rectal Mel another one that we just launched but we've just got.

This is one really can't talk enough about from a standpoint of.

Where are we going in the future of <unk> and today, it's about 10% of the overall market of the World. We think it will grow up to around 25, 30% over the next decade and keep in mind. This is this is a part of the.

Permitting for it in California.

And this is a Nevada side that is novel from a standpoint that it is selective with the.

Bad <unk> and keeps all the good things in the soil. So.

That's growing faster and it has higher margins because of just the.

Again, new technology that adds value on the farm that is helping not only our margins, but man, it's helping the farmers and their returns as they grow and then biologicals.

Value it puts on the farm when you began to use this in the right way. So our portfolio mix makeup is advantageous to us from a margin standpoint, as we progress and then as we begin again to keep taking costs out we think we're in a really good position as we walk into second half.

This is one really can't talk enough about from a standpoint of.

And then on to 2027 hope that helps.

Comes from the line of Patrick Cunningham of Citi. Your line is now open.

That's growing faster and it has higher margins because of just the the value. It puts on the farm. When you began to use this in the right way. So our portfolio mix makeup is advantageous to us from a margin standpoint, as we progress and then as we begin again to keep taking costs out.

Hi, Good morning, just on the realization of Cogs benefit from commodity cost deflation, how sizeable is that benefit than in the first half of 'twenty five and should that there'll be a sizable benefit in 2020, given the direction of grain prices.

We think we're in a really good position as we walk into second half and then on to 2027 I hope that helps.

Thanks, Patrick its David.

I would say that we're slightly ahead in total for our net cost improvement and seeing some of that is definitely the commodity impact.

We will remind everyone that the commodity runs through our P&L over two or three year period.

Comes from the line of Patrick Cunningham.

Citi. Your line is now open.

It has to do with commodity hedges and our inventory positions and so on so we would say if you step back and think about the $700 million net impact for a three year plan half of that being seed I would say that that lines up pretty well and gives us a little bit more confidence in that plan for the next two or three years.

Thanks, Patrick its David.

I would say that we're slightly ahead in total for our net cost improvement in seed and some of that is definitely the commodity impact.

Our final question comes from Duane <unk>.

<unk> of Mizuho. Your line is now open.

Remind everyone that the commodity runs through our P&L over two or three year period.

Thank you good morning, everyone.

You've been involved in all aspects of the quad.

Okay. So you answered here.

Really appreciate it so there's clearly a disconnect between crop prices and input costs right. So how does that this is going to get corrected will they have to the lack of collection and input prices and related to your oil company like how can seed prices continue to move up in that environment.

Our final question comes from Duane <unk>.

Yeah, Good morning Island so.

<unk> of Mizuho. Your line is now open.

I wouldn't say there is a huge disconnect.

Thank you good morning, everyone.

We watch farmer margins very carefully and today I'd say, if you just take the U S farmer and say the Brazilian farmer.

You've been involved in all aspects of the quad.

Okay, So youre inside here.

They're operating in a market that they've seen many many times before in their history right. So we have relatively.

Really appreciate it so there's clearly a disconnect between crop prices and input costs right. So how does that this is going to get corrected what do they have to be like a correction and input prices and related to your company like how can seed prices continue to move up in that environment.

Relatively low crop prices if they own their land they are still quite profitable if theyre renting land margins are quite thin and in some cases, depending on productivity there could be negative and they will firm like that all day long.

Yeah, Good morning, Netherlands so.

Look I'll tell you I just spent most of the spring season traveling through Argentina, Brazil, Canada and of course through the U S.

I wouldn't say there is a huge disconnect.

We watch farmer margins very carefully and today I'd say, if you just take the U S farmer and say the Brazilian farmer.

And every farmer that I talk to wanted more of our.

They're operating in a market that they've seen many many times before in their history right. So we have relative.

Technology, especially when it comes to seed technology, they need the yield when things are this tight they really need the yield that could be the difference between being profitable and not being profitable with a few bushels per acre.

As long as we have the price for value in other words, we bring genetic gain to the farm and that's our promise to the farmer right. If you buy our new products, yes. They may cost you more but you're better off financially. It's a very simple process and so I'm actually very hopeful that we will just continue with this.

Look I'll tell you I just spent most of the spring season traveling through Argentina, Brazil, Canada and of course through the U S. And every farmer that I talk to wanted more of our technology, especially when it comes to seed technology. They need the yield when things are this tight they really need the <unk>.

<unk> because farmers are asking for it in fact, I'd say farmers want to us to take the returns from our seed and put it back into our R&D pipeline and they know that that's not free. So I think we've got a great view here do we all wish that crop pricing was a little higher I, absolutely and like.

That could be the difference between being profitable and not being profitable with a few bushels per acre.

I said I've got a view today that the fundamentals of this business are actually stronger than the crop pricing.

And what the market is expecting is a huge crop.

And then the trade uncertainty is also weighing on the futures price. So we'll know a lot more I think in the next quarter or two but with the consumption continuing to increase I think that over time. This thing will normalize, but I havent met one farmer that doesn't plan to increase their production and productivity.

<unk> because farmers are asking for it in fact, I'd say farmers want us to take the returns from our seed and put it back into our R&D pipeline and they know that that's not free. So I think we've got a great view here do we all wish that crop pricing was a little higher absolutely and like.

Over my travels this year, so hopefully that helps.

I said I've got a view today that the fundamentals of this business are actually stronger than the crop pricing.

That concludes our question and answer session I'd now like to hand, the call back to boost.

My final remarks.

And what the market is expecting is a huge crop.

Great. That's the end of our call. We thank you for joining and for your interest in courts. However, and we hope you have a safe and wonderful day.

And then the trade uncertainty is also weighing on the futures price. So we'll know a lot more I think in the next quarter or two but with the consumption continue to increase I think that over time. This thing will normalize, but I havent met one farmer that doesn't plan to increase their production and productivity.

Thank you for attending today's call you may now disconnect Goodbye.

Okay.

Over my travels this year, so hopefully that helps.

That concludes our question and answer session I would now like to hand, the call back to Kim.

My final Goodbye.

Great. That's the end of our call. We thank you for joining and for your interest in <unk> and we hope you have a safe and wonderful day.

Thank you for attending today's call you may now disconnect Goodbye.

Yeah.

Okay.

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