10-QPeriod: Q3 FY2020

Corteva, Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 5, 2020For Securities:CTVA

Summary

Corteva, Inc. reported its third quarter and year-to-date financial results for the period ending September 30, 2020. For the three months ended September 30, 2020, net sales were $1,863 million, a decrease of 3% year-over-year, primarily due to currency headwinds and a slight portfolio impact, partially offset by volume and price increases. The company reported a net loss of $390 million for the quarter, an improvement from a loss of $505 million in the same period last year. For the nine months ended September 30, 2020, net sales increased by 1% to $11,010 million, with a net income of $658 million, a significant improvement from a net loss of $923 million in the prior year period. The company's performance was influenced by ongoing cost synergies, productivity efforts, and a strategic focus on new product adoption, despite challenges from currency fluctuations and global economic uncertainty related to COVID-19. The company continued to manage its operations effectively amidst the ongoing COVID-19 pandemic, which was identified as an "essential business" sector. Corteva maintained its business operations without material impact on financial results, though localized disruptions in sourcing and logistics were experienced. The company also provided an updated outlook for the full year 2020, expecting a net sales increase of approximately 1-2% and Operating EBITDA to be down 4% to up 1% compared to 2019, reflecting continued currency headwinds and economic volatility. Significant investments in new product development within the crop protection segment were noted, contributing to volume gains.

Financial Statements
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Key Highlights

  • 1Net sales for Q3 2020 were $1,863 million, down 3% YoY, impacted by currency and portfolio, but offset by volume and price increases.
  • 2Q3 2020 reported a net loss of $390 million, an improvement from a $505 million loss in Q3 2019.
  • 3For the nine months ended Sept 30, 2020, net sales were $11,010 million, up 1% YoY, with net income of $658 million, a substantial improvement from a net loss of $923 million in the prior year.
  • 4Operating EBITDA for Q3 2020 was a loss of $179 million, showing improvement from a loss of $207 million in Q3 2019, driven by volume gains, favorable mix, and cost synergies.
  • 5Year-to-date Operating EBITDA was $1,851 million, up from $1,763 million in the prior year, supported by productivity actions and volume gains.
  • 6Corteva expects to complete its $1 billion share repurchase program by the end of 2021, ahead of its initial timeline.
  • 7The company maintained strong liquidity, with approximately $6.4 billion in committed and uncommitted unused credit lines available as of September 30, 2020.

Frequently Asked Questions

For the three months ended September 30, 2020, Corteva reported net sales of $1,863 million, a decrease of 3% compared to $1,911 million in the third quarter of 2019. This decrease was primarily driven by an 11% decline in currency impacts and a 1% negative portfolio impact, partially offset by a 7% increase in volume and a 2% increase in price.

For the nine months ended September 30, 2020, Corteva reported net income of $658 million, a significant improvement from a net loss of $923 million during the same period in 2019. Net sales for this period increased by 1% to $11,010 million.

Corteva considered agriculture an "essential business" and was not significantly impacted by government restrictions. While some localized sourcing and logistics disruptions occurred, they were temporary and did not materially affect financial results. The company maintained its operations and expects to complete its share repurchase program ahead of schedule. The full-year 2020 outlook anticipates a net sales increase of 1-2% and Operating EBITDA to be down 4% to up 1% compared to 2019, reflecting ongoing market volatility.

Corteva operates in two primary segments: Seed and Crop Protection. In Q3 2020, Seed net sales decreased by 23% primarily due to timing shifts in North America and currency impacts, while Segment Operating EBITDA improved to a loss of $282 million. Crop Protection net sales increased by 9% driven by volume gains and price increases, with Segment Operating EBITDA rising to $130 million, demonstrating strong performance in new product adoption and cost synergies.