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The chemical company was spun out of DowDuPont in 2019, and it is now one of the largest commercial producers of pesticides and seeds for the agricultural industry. With modest 2.7% sales growth in a tough year for the economy, Corteva delivered a 33% return to shareholders in 2020.

This year's Fortune 500 marks the 66th running of the list.

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DowDuPont separated into three publicly traded companies in 2019: a materials science business called Dow; a specialty products business called DuPont; and an agricultural business called Corteva, which provides farmers with seed, crop protection, and digital solutions.

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43.CTW20.Corteva-Agriscience

The agricultural giant spun off from DowDuPont in 2019 works closely with development agency USAID in Africa and Asia. By improving yields and sustainability practices for small farmers there, including through its drought resistant and heat-tolerant seeds, Corteva has helped boost incomes and food security. Its latest goal: helping half a billion small farmers worldwide increase productivity by up to 300% by 2030.

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Corteva (also known as Corteva Agriscience) made its debut on the Fortune 500 list in 2020, one year after it was spun off from DowDuPont and became a public company. Soon after it began trading on the stock exchange, the then-largest U.S.-based manufacturer of the pesticide chlorpyrifos announced that it would cease chlorpyrifos production. Today, the leading agriculture company’s mission is to maximize productivity and profitability for farmers—that means developing and providing seed, crop protection, and digital solutions for them. As of 2025, the company operates across the United States, Canada, Latin America, the Asia Pacific, Europe, the Middle East, and Africa.

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Corteva (CTVA): Company Profile, Stock Price, News, Rankings

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Corteva

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Hello, everyone. Thank you for joining us and welcome to Corteva Agriscience Q1 2026 earnings call. After today's prepared remarks, we will host a question and answer session. I will now hand the conference over to Kim Booth, VP of Investor Relations. Please go ahead.

Good morning, and welcome to Corteva's first quarter 2026 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, Judd O'Connor, 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 Corteva 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 statement. 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's now my pleasure to turn the call over to Chuck.

Thanks, Kim. Good morning, everyone, and thanks for joining us today. Spring is always a busy and exciting time for agriculture, and this year is no exception. Planting in the Northern Hemisphere is proceeding well. The weather has cooperated for the most part, and we are well-positioned with technology that is in high demand. However, farmers remain cautious and value-driven. Crop mix and technology choices are increasingly strategic, aligning acreage and input decisions towards crops with the best demand signals. Overall, strong crop acreage is supporting strong Seed and Crop Protection volume demand. There are some back half risks we are monitoring. We will discuss those today, but let's start with the quarter. Both Seed and CP delivered healthy double-digit EBITDA gains with all-in benefits on price/mix, volume, cost, and currency.

Year-over-year, Corteva delivered a 21% increase in Q1 EBITDA and over 200 basis points of margin expansion driven by our core portfolio, our growth platforms, and focused cost execution. While some of Seed's strong North American volume performance can be attributed to timing shift, price/mix gains in every region are a clear signal that regardless of tight margins, farmers continue to plant our latest hybrids and varieties in order to increase yield per acre and their own profitability. Volume gains in crop protection across all regions were driven by double-digit gains in new products and spinosyns, reflecting continued demand for our premium technologies. This performance allows us to reaffirm our full year guidance, which we announced in February. It also allows us to de-risk the second half of the year slightly. David will explain more.

Factored into our guidance is the fact that farmers in the U.S. are expecting to shift planted area from corn to soybeans, resulting in a projected 3%-4% reduction in corn acres. If current trends hold, Enlist beans will be planted on about 65% of all U.S. soybean acres in 2026. As it approaches maturity, Enlist is the number one selling soybean technology in the U.S. As you know, our focus is now set on becoming the leading provider of soybean technology in Brazil, the largest soybean market on the planet. Our branded corn business already holds the number one position in Brazil. We are confident our licensing model for soybeans will allow us to efficiently gain share in this critical market. We're making great strides on that front, and we're expecting trait penetration to cross into double-digit this year.

With regards to the Middle East conflict, although we have minimal commercial presence in the area, we're monitoring the situation closely. Given what we know today, while we're keeping an eye on any feedstock exposure to our supply base, the main impact for Corteva is currently related to increases in oil prices. However, given typical inventory cycle turns, we believe the 2026 impact is manageable within our current guidance range. David will get into the details, but we're also seeing some favorability on the tariff front from what we communicated in February. Globally, from an overall industry perspective, we continue to see mixed fundamentals. Record demand for grains and oilseeds continues, and farmers are investing in premium seed and crop protection technologies to enhance and protect their yields.

Overall crop prices have increased from a year ago, but margins are still tight as large global crop production and geopolitical uncertainty continues to weigh on the markets. Several farmer input costs, such as fertilizer and fuel, have been impacted by higher oil prices. Our latest view on the crop protection market for the full year assumes modest growth with low single-digit volume gains more than offsetting slightly negative pricing. For Corteva, we expect mid-single-digit volume gains more than offsetting low-single-digit pricing headwinds. As we sit here today at the beginning of May, I'm pleased with our first quarter performance. As we all know, the first quarter doesn't dictate the full year in agriculture. I'd say the first half is playing out a little better than expected.

We're showing good progress on our growth platforms, and I believe we have the appropriate level of attention on improving our cost position through our controllable levers. Crossing the milestone of royalty neutrality into royalty positive later this year is a monumental accomplishment and a sign of what's to come. We already have over 100 independent seed company licensees for PowerCore Enlist corn and Enlist E3 soybeans. These self-help levers continue to drive value creation for the company and provide meaningful margin enhancement through the ag cycle. Let me also give you a quick update on our separation. First, we remain on track for a separation sometime in the fourth quarter, and we're trending favorably against our estimated $100 million of net dis-synergy estimate.

You will have seen a few weeks ago, we announced the new CEO for the company that will become Corteva, home to our CP business. Luke Kissam is an experienced CEO with a proven track record of delivering results, and we're pleased he'll be joining the company on June 1st. We also announced the two executive leadership teams for the new companies, both which include a mix of existing and new members, but all of whom are aligned to our culture and values. They share a passion for agriculture, science and innovation, as well as a commitment to the teams that they will lead and the employees, customers, and shareholders they will serve. In addition, we filed our initial Form 10 with the Securities and Exchange Commission with the intention of having a public filing later in the second quarter.

Last but not least, earlier this week, we announced the name of the future pure-play global advanced seed and genetics company. When we started thinking of a new name for our new company, we knew we wanted to honor the legacy of the generations of employees and farmers whose ingenuity and hard work have fed the world and made us an undisputed leader in solving some of the world's biggest challenges, including food and energy security. We wanted to ensure that the technology that stands our company apart was reflected in the brand with a look and feel that was modern and tech forward, but still rooted in the conviction that science and innovation can change the world for the better. I'm therefore pleased to introduce the combination of our efforts, Vylor. The name itself is derived from the word valor.

Again, acknowledging the generations whose work made Vylor possible. We will talk more about this at our September Investor Day event, Vylor's success will be driven by industry-leading germplasm, biotech and gene editing capabilities, as well as a world-class pipeline that includes an exciting new licensing business, proprietary hybrid wheat technology launching next year, and a next-gen biofuels development program. With a nod towards the future, Vylor reflects our passion, our ambition, and our shared determination to advance agriculture to maybe one day opportunities beyond row crops. You can see that this year is off to a busy start as we work to get this separation across the finish line while ensuring our customers continue to get the level of performance and support they have come to expect from Corteva.

Before I turn it over to David Johnson, I'd like to take one minute to honor the fact that just a few weeks ago, Pioneer turned 100, an iconic brand if there ever was one. In 1926, Pioneer and its hybrid corn didn't just change agriculture, it changed the world. We're about to do it again. Just like last time, we will do it with groundbreaking technologies from gene editing to hybrid wheat to safe, effective, sustainable crop protection products, including biologicals. It's easy to lose sight of accomplishments when we're so focused on the critical tasks at hand, but a milestone like this deserves to be celebrated. Lastly, I wanna take a moment to recognize our employees for staying focused on what matters most, executing for our customers while managing a significant number of competing priorities during the quarter. David, over to you.

Thanks, Chuck, and welcome everyone to the call. Let's start on slide six, which provides the financial results for the first quarter. Results for the quarter were strong, led by an expected timing shift from fourth quarter and early season start in Seed deliveries and Crop Protection volume gains in all regions. Our organic sales were up 7% compared to last year, with Seed up 9% and Crop Protection up 4%. Currency was a tailwind to the top line at 4% of sales in line with expectations. Seed price/mix was up 3% in the quarter, with gains in all regions as we continue to price for value. Seed volumes was up 6% compared to the prior year.

Volume shifts in North America from fourth quarter 2025 were expected, and we also had an early start to the North America season due to favorable weather. In addition, we saw continued growth in our Brevant retail brand. Crop Protection price was down 2% as expected, driven by competitive market dynamics, primarily in Latin America. Crop Protection volume was up 6%, but gains in every region. Notably, new products and spinosyns delivered double-digit volume gains in the quarter. As mentioned before, it's more meaningful to look at our business by half. Timing shifts between the first and second quarter are routine in our industry, while performance in Northern and Southern Hemisphere is more complete when looking at the six-month period. Operating EBITDA was up 21% over last year.

Operating EBITDA margin of over 29% was up 240 basis points, driven by organic sales growth and continued cost savings from productivity. Moving on to slide seven for a summary of the first quarter operating EBITDA performance. Operating EBITDA was up nearly $250 million to over $1.4 billion. Volume gains, price and mix, currency, and cost benefits more than offset headwinds from higher selling expenses. Seed continues to make progress on its path to becoming a royalty positive later this year with another $30 million decrease in net royalty expense this quarter. This improvement was driven by lower royalty expense on certain in-licensed traits. Seed and Crop Protection combined to deliver roughly $70 million in productivity and input cost benefits, including lower seed commodity costs.

In the first quarter, SG&A was up compared to prior year, driven by unfavorable currency, bad debt, higher commissions from sales increases, and higher compensation and functional spend. We expect first half SG&A as a percentage of sales to be relatively flat compared to the first half of 2025. Currency was roughly $60 million tailwind on EBITDA, primarily driven by the euro. Both Seed and Crop Protection had an impressive first quarter and delivered double-digit EBITDA growth and meaningful margin expansion. Moving to slide eight, let me briefly reaffirm our full year 2026 guidance. We continue to expect operating EBITDA in the range of $4 billion-$4.2 billion, with margins of 22%-23% and operating EPS of $3.45-$3.70, representing approximately 7% growth at the midpoint.

This outlook is underpinned by broad-based organic growth, supported by continued execution on our controllable levers. While we are seeing some favorable signs from an early start to the Northern Hemisphere season, we will have a better view in a few months if we foresee any changes to our full year expectations. With that, let's go to slide nine and transition to the key assumptions for the first half and second half of the year. Starting with the first half, our performance is driven by strong execution in North American seed. Overall price/mix is expected to be roughly flat, with Seed up low-single-digits, offset by low-single-digit declines in Crop Protection. We continue to keep an eye on broader ag input pricing but believe the majority of U.S. inputs have already been purchased for the season and will not be impacted by recent price increases.

We are also seeing meaningful benefits from productivity and lower input costs in the first half, which is helping support margin expansion. At the same time, SG&A is expected to increase modestly versus the prior year from higher commissions and bad debt. From a currency standpoint, we are seeing a benefit in the first half, primarily driven by the euro. Turning to the second half, we expect continued momentum driven by volume growth in Crop Protection, particularly in Latin America, with our Biologicals portfolio contributing more meaningfully as is weighted to the back half. On the Seed side, we see a stable demand environment supported by stable corn acreage in Brazil. From a price/mix perspective, Seed is expected to improve low to mid-single digits, while Crop Protection pricing remains pressured with low single-digit declines year-over-year. Productivity will continue in the second half across both businesses.

We also expect to see the net impact of tariffs and higher oil prices show up more meaningfully in the back half of the year, aligned with Crop Protection inventory turns. As a reminder, tariffs are included in our guide and are trending slightly better than expected, while higher oil prices are driving a $40 million headwind, also included in guide with active mitigation underway. Finally, currency is expected to be a tailwind in the second half as well, driven by exposure to the Brazilian Real. With that, let's go to slide 10 and summarize the key takeaways. First, we delivered a strong start to the year with first quarter performance ahead of expectations, driven by continued organic growth across both Seed and Crop Protection. This reflects the strength of our portfolio and continued execution of our price for value strategy.

We're seeing clear benefits from our focus on controllables with input cost savings and productivity improvements translating into meaningful margin expansion in the quarter. In addition, we made solid progress this quarter on our path to becoming royalty positive. We also remain on track to return significant capital to shareholders, including a plan to complete approximately $500 million of share repurchases in the first half of the year. As expected, 1st quarter cash flow was impacted by the Bayer Agreement and separation items. Absent these items, we would expect our full-year free cash flow conversion to be in line with our midterm target discussed at the 2024 Investor Day.

We are reaffirming our outlook which reflects continued growth in sales, EBITDA, and margin for the full year. This is supported by strong demand for our differentiated technology and disciplined operational execution across the business. Finally, we remain on track with the separation, announcing many key milestones over the last several weeks. We recently filed our initial Form 10 and expect to have a public filing towards the end of the second quarter. Due to regulatory requirements, the separation is being treated as a reverse spin-off in the Form 10 and new Corteva presented as discontinued operation. We expect one-time costs to be approximately $350 million, consistent with external benchmark ranges, with the majority expected to be incurred during the second half of the year.

We are also seeing some favorability in our previous estimate of $100 million in net dis-synergies, with $50 million included in our 2026 guide. Finally, I wanted to share an important update regarding our ongoing capital structure setup. Last week, the board approved a $1.5 billion discretionary contribution to the U.S. pension plan. This decision is a strategic part of our broader capital structure setup aimed at positioning both companies for long-term success. By taking this step, we are ensuring that each entity develops a strong investment-grade credit profile on a standalone basis, which is made possible by the strength of Corteva's balance sheet today. With that, let me turn it back to Kim.

Thanks, David. 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.

Thank you. We will now begin the question-and-answer session. We ask that you limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Chris Parkinson with Wolfe Research. Please go ahead.

Great. Thank you so much. Chuck, obviously, there's a lot going on this year in terms of the world of agriculture between yourself, you know, Syngenta, BASF. The numbers, you know, have kind of spoken for themselves thus far. In terms of your competitive positioning as a company within the industry, and I don't care if you wanna focus on the Seed side of it, or the Crop Protection side of it, but everybody's kind of touting their portfolio and how it's best. Where do you think investors should be focusing the vast majority of their time into the second half? Where's the most optionality? What should we be the most enthusiastic about? I'd love to hear your perspectives on that in terms of the trajectory of the company for the next few years. Thank you.

Yeah. Good morning, Chris. It's a great question. I'll give you some thoughts today. Of course, this is gonna be the entire focus of the Investor Day that we have planned for September 15th in New York. Both companies will lay out actually multi-year financial and strategic plans. That's my plug for the morning is please dial in for that. Let me just give you some thinking. Look, I think from an overall perspective, Corteva laid out the three-year plan. We're well on track. Some could say even we're trending slightly better than that. If you come down to why that is, there are really two big levers that we're pulling, right?

We're using our technology and we're developing the new technology and putting it into the hands of farmers. Let me unpack that in just a minute. Then I think we've been one of the first in our industry to really go after cost productivity, I'd say, with a very set of disciplined, processes internally, and that's created an awful lot of value. If the last, three-year plan we put in place, there was $1 billion of cost, and we're trending a little ahead of that. Beyond that, then just to answer your question, look, we would stack up our technology and our pipeline on both sides of the house to anybody, in the industry. In fact, I'd say in many ways we're leading.

If you just look at new Corteva, the Crop Protection business, you know, we've talked about the size of the portfolio. If you think through that, in the next decade, we're gonna have something like seven new active ingredients, plus a whole host of new biologicals. In fact, we're gonna roll out our first biocontrol, which would be kind of the one of the first in the industries with the efficacy that we think we have. There's just lots of excitement there. You know, we made the investment a few years ago in biologicals, and today our CP business would be one of the leaders there. There's a lot to like on the portfolio. The separation, I think, is gonna open more doors for the Crop Protection business. I'd say that our portfolio is extremely strong in CP.

When you look on the other side of the house, when it comes to now Vylor, so no more SpinCo, which I think is one of my favorite things of this call today. You think how we're gonna grow the Seed business in the future. You know, it's gonna come down from out licensing. This is the first year that we're gonna be royalty positive, and that's new information for this morning. We were thinking we would be royalty neutral. With the Bayer agreement that we signed back in February, we're seeing just very strong demand for our corn and soybean technology.

We said last quarter that that would be about $1 billion of incremental revenue over the next decade or so. Pretty sizable growth from licensing just our bread and butter, which is corn and soybeans. On top of that, you've got the hybrid wheat program, another $1 billion opportunity. It may be a little longer term, but a $1 billion opportunity nevertheless, with our own proprietary sterility system, and we're going to take that technology globally. Beyond that, we'll talk. This is where, you know, the commercial has to be for September. The gene editing and biotech capabilities that we have today, especially gene editing capabilities, we feel we can go beyond corn and soybeans and potentially wheat to other row crops and even potentially beyond that.

That's the information that we're gonna share in September and kind of our longer term growth strategy. Even the core growth that we just said, if you start thinking about that, what it looks like from a growth perspective, I think Vylor is a classic growth compounder when you look at its margins, its conversion to free cash flow and its top and bottom line growth.

Your next question comes from the line of Vincent Andrews with Morgan Stanley. Please go ahead. Vincent, a reminder to please unmute yourself locally.

Sorry, I haven't done that in a while. Thank you and good morning, everyone. Chuck, in the press release, you talked about, you kind of teased us with the idea that the S&D environment and crop chemicals is starting to improve with some developments out of China. I'm wondering if you could speak to that and, you know, when you think that might manifest itself in your results. Doesn't seem like you're putting anything into the back half of the year for it.

Good morning, Vincent. Look, we all know where we are in the global CP industry cycle. If you think about 2025, that was the first year we were actually flat and we were sort of celebrating that we saw a flat market because the prior two years, 2024 and 2023, they were pretty tough in this industry. In February, when we gave our annual guide, we said, "Hey, 2026, our view is that it will be the first year in several that we'll see the industry return to growth. Don't get excited because it's gonna be modest," and we said low-single-digits. We're still of that view. The macro perspective for us has not changed.

We think globally, the crop protection industry will grow slightly in 2026, but it's a lot better than where it's been. What's driving our conviction on that? There's a couple things. We're seeing a few changes. With higher energy and oil pricing around the world now, that is adding cost inflation to AI production in the low production jurisdictions around the world, namely India and China. We are seeing price increases actually for certain AIs. The other thing we're finding is that we are seeing a slight slowdown in China exports into Brazil, and it is slight. I wouldn't say that you can say it's a trend yet because the data is pretty recent as of March, but it is certainly a good data point.

When we add it all up, we start to think about what is the impact? For 2026, I'd say the impact is probably minimal, just to be very candid with you because Brazil has their inventories, I think, that they're gonna need for at least most of the year. This could be a positive sign as we get kinda late 2026 and as we enter 2027 first half. That's kind of how we see the industry shaping up, is a return to slow growth, and there's some positive signs out of China when it comes to sort of the cost of their AIs and what's coming into Brazil that's giving us some hope.

Yes, there was. We mentioned this in February, that China put also some export controls of VAT back on, which is also causing, I think it's about an 8% price increase for certain amounts of AI. Another positive data point, Vincent.

Your next question comes from the line of Joel Jackson with BMO Capital Markets. Please go ahead.

Hi. Good morning. Couple questions sort of together. Can you just first talk about, you know, how much of earnings from Q4 got pushed into Q1? I know you don't like, Chuck, to, you know, change your guidance in, in May, for a year until the season's over for North America. It looks like, you know, if you look at the puts and can you talk about the bridge for 2026 and what's changed since you thought a few months ago? FX seems a bit better. Talk about royalties being a bit better. Talk about energy costs being a bit worse. Can you maybe just give us the high-level buckets of what's better and worse versus what you thought a few months ago?

Yeah. Joel, I'll have David answer those questions. You're right. Look, in agriculture, we're still planting right now. There's not much difference between what we know in February and what we know at the end of the first quarter. We usually do not adjust guidance. We think about our business squarely first half, second half, and we'll make the necessary adjustments after Q2. I'd say that overall, there's puts and takes. David will walk you through all of those. Overall, the year's shaping up to be a little better than we expected in February. David, over to you.

Yeah. I would say when you look at the amount that went into the first quarter, obviously we had that in our original bridge. Whenever you think about kind of where we are vis-a-vis our original assumptions, we are pretty much in line for that. You know, obviously Q1, very strong start. We did say that even though we look at our businesses in halves.

That we do expect the first half to be up more than we had originally expected. We had expected that both halves would be fairly flat from a year-over-year percentage increase, you know, around that, you know, 7% kind of a number. Right now we expect the first half to be a little bit stronger than that. When you look at the actual bridge items, and actually I think, you laid them out very well, Joel. I mean, I think, you know, currency's likely to be a little bit favorable. I think when you look at where we are with our royalty journey, that's probably gonna be a little favorable than our original assessment. There are things like the Iran conflict, you know, adding to inflation, so on and so forth, mainly in the back half of the year.

We've sized that up as a $ -40 million kind of number right now. Tariffs we expect to be, you know, slightly favorable. You add all that together, and these are pretty minor puts and takes when you think of a $4+ billion kind of an outlook number. That's where we are at this point in time. Again, we'll look at these items. We'll also look at things like our interest expense, tax rates and all that sort of thing, because I do feel like we're a little bit favorable probably on the lower end on our tax rate assumptions also.

Your next question comes from the line of David Begleiter with Deutsche Bank. Please go ahead.

Thank you. Good morning. Chuck, I know you mentioned input costs wouldn't impact U.S. farmers this year, looking to next year, do you expect any impact on farmer behavior, buying decisions given what we've seen on the cost side? Thank you.

Yeah. Good morning, David. I think that the thing that if we start with what we've seen this year, it's interesting if you look at the future's pricing. Clearly the market right now is actually calling for a bit more corn area to be planted. Our order book would reflect dimensions of that for sure. As we said already in the prepared remarks, the majority of U.S. farmers already had fertilizer for the season. We don't anticipate that what we've seen with higher energy prices today have or will impact U.S. planting decisions. Now, higher fuel pricing on the farm is certainly stressing farmers in the U.S., I say around the world as well. David had mentioned this already.

We are watching this for the second half in Latin America, because if higher energy prices persist, I think it could impact the, not only the amount of area that's planted, but also what is planted in Brazil specifically. We're just trying to understand what that is. It's right now we're not overly concerned. Our second half forecast is around flat area, I think, for Safrinha, and this is an uncertainty that we're monitoring. If you fast-forward, okay, well, what happens in the U.S. second half of the year, potentially into 2027, there's a lot of puts and takes that could get us, you know, to the situation.

I would say the one thing that we're quite confident in the U.S. is that you're going to see 180,000,000 acres planted of corn and soybeans, and it's going to be determined on terms of energy prices, fertilizer availability and cost, as well as the futures pricing to determine sort of what that mix look like. Right now, I'd say that that's some of the things and the dynamics that we're watching, it's way too early for us to talk about the next U.S. season. Those are some of the things that will, I think, determine. For this year, I think we're still very comfortable with 95,000,000 acres of corn and around 85,000,000 acres of soybeans being planted. That would be sort of directional in what we're thinking about for this spring.

Your next question comes from the line of Kevin McCarthy with Vertical Research Partners. Please go ahead.

Yes, thank you, and good morning. Chuck, I was wondering if you might walk us through some of the next mileposts that you're most focused on in terms of the pending separation. Nice to see the new name, Vylor, and the new management as well. It sounds like a Form 10 is coming over the next month or two. More interested on kind of the operational side. You know, maybe you can elaborate on what you're able to do, if anything, to attack the dis-synergies, pre-spin versus post-spin and other sort of mileposts that you need to pass prior to the capital markets date.

Good morning, Kevin. Yeah, I'll start and then David can add some of the details here. The bottom line is there's been no surprises so far in the separation process. Lots of moving parts. We have literally hundreds of people that are doing two jobs right now, separating and taking care of their customers. So far so good. We are on track for Q4, and that's still feeling very, very good. As David mentioned, you know, the net dis-synergies were probably trending a little bit better than the $100 million, and we've got the $50 million built into the guide. We did have some very important milestones in Q1. We announced Luke Kissam as the new Corteva CEO, which we're delighted that he's joining us.

We have the two executive leadership teams now. We filed the initial Form 10. As you mentioned, we have a name now for the seed and genetics company, Vylor. We still have some headquarter decisions to make, where we're gonna base our operations. That will be in the second quarter. We'll have the public filing, I think, David, in the second quarter as well, and he and David can unpack that for you. In the second half of the year, we will announce the board of directors for both companies, finalize the capital structure, I believe.

September 15th I hope will be the highlight where both companies will introduce the management team, like I already said, the strategic and financial plans. David, what did I miss?

You hit just about everything there, Chuck. I'll give maybe a little bit more color on the net dis-synergies. You know, when we first initially came out, we said about $100 million. When you look at that and break it down into two kind of major categories, there's an outside spend component of that. Think about IT costs, you know, corporate costs, external public company costs, those sort of things. Those are trending pretty much where we expected, and that will be a dis-synergy. There's just more costs when you separate the businesses for some of these elements.

You get down to the other side of the house, which is more organizational structure, these sort of things. A lot of the heavy lifting in the separation, I would say, other than IT in the last couple months, was really getting our org structure appropriate for both businesses. You know, we've talked about this before where the new Corteva business is basically operated as a global functional business. By large amounts, you know, when we look at the Seed business, it's much more of a regional business. We had talked about having, you know, a certain layer of management, what have you, to kind of keep that together as Corteva. Well, as we've unwound that, we have now implemented a restructuring program which we talked about $80 million that we took a hit in Q1.

That is all in effect to get these two org structures appropriate for both businesses. When you add that all up, that's probably where we're a little bit favorable than our original estimates as we're still working through it. As you can imagine, splitting 22,000+ people into two organizations is a lot of work. That's really where a lot of the heavy lifting has been recently.

Your next question comes from the line of Jeff Zekauskas with JPMorgan. Please go ahead.

Thanks very much. The first quarter was a little bit puzzling because corn volumes were up 7% and soybeans were down. All things being equal, soybean acres should be up this year and corn acres down. Why was corn up and soy down? For David, I think you said you're gonna There, there was no free cash flow slide. I think you plan to contribute $1.5 billion to your pension plan, which comes out of cash flow from operations. Are you giving an adjusted number for free cash flow? In the first quarter, you used, I think, $700 million more cash flow than you did last year. Can you break that up into pieces and explain it? Thanks.

We'll have Judd answer the corn and soy question, and David can handle the free cash flow. Go ahead, Judd.

Yeah. Thanks, Jeff, for the question. Maybe just to touch base on both of them. Obviously, North America in particular is a first-half business versus a first-quarter business. That March 31, April 1 date, one week of deliveries can make a big swing. We did have some volume of corn that came out of fourth quarter 2025, just because we didn't get as much into fourth quarter 2025 as we had, you know, typically in prior years. Then on the soy volume side, you know, we'll just have to wait and see. We don't see any from an order book standpoint. We're in a solid position.

It's just a timing between first quarter, second quarter. We'll know more, obviously, in terms of where we're exactly at at the half. No red flags. Crops going in the ground well. We're a little bit ahead for both corn planting as well as soy planting. Feel like we have a very strong position from a corn share perspective. You know, soy acres we believe are gonna be up, that we're gonna be participating on our share of those acres. Let us get through planting, we'll be able to give you the full story.

Yeah. On free cash flow, you know, we always said going into this year that free cash flow was gonna be a little bit unusual because we would have some discrete elements regarding, you know, our capital allocation and so on and so forth, mainly setting up the two structures going forward. When you look at Q1, the $700 million, by and large, the biggest impact of that is the Bayer agreement that we paid out in Q1. Then we also said from an operational side, I think the most important side is the business itself is still right in that, you know, 40%-50%, 45%, the midpoint conversion rate. As we go forward, to your point, we will have elements of, you know, spend like the one-time, you know, separation costs that we outlined, the $350 million.

We had the Bayer agreement. We'll have the $1.5 billion in pension, which that is on a pre-tax basis. When you look at the tax savings on that, it's about $290 billion.

Your next question comes from the line of Duffy Fischer from Goldman Sachs. Please go ahead.

Yeah. Good morning, guys. I want to drill down on Latin America and kind of the upcoming season. You're holding your expectation for corn acres flat. If you look, nitrogen is what's really ripped in the last couple of months, which makes soy more favorable, all else equal, relative to corn. What's the logic in holding that? And then two, if you move 1,000,000 acres from corn to soy in Latin America, we know kind of the rule of thumb in North America, but what would that do to your P&L in Latin America? Just a third one, as working capital has become or bad debts have become a little bit of an issue in North America, how are you thinking about that for Latin America? How much working capital are you willing to put out this year, let's say, relative to last year?

Yeah, Duffy, I'll take the first couple pieces here, then I think David can touch base on the bad debt question. You know, first of all, from a Safrinha perspective, it's a bit different in Latin America, particularly Brazil, than it is in North America. North America it's corn acre or soy acre. In Latin America, the Safrinha acre goes after the soy acre in the timing of that crop. It's a double crop system. When we say we're flat with Safrinha, that's really we've continued to expand that second corn crop following soybeans, geez, for the last eight or 10 years in a row. This year with fertilizer prices, we're looking at it saying we could have a flat year and not actually expand the area.

From an acreage planted standpoint, it's a bit of a blue ocean in that we're only still with Safrinha corn, second winter corn, on a fraction of the, of the soy acres. On the, on the soy corn shift, obviously, I think we've shared the North American number. I don't have the Latin American number, but it would be materially less than, you know, a 1,000,000 acre shift in Latin America. It would be much, much less than North America. David?

When we look at kind of our what are we offering in Latin America regarding mainly credit terms and what have you, given interest rates and such, you know, I think that's where we rely a little bit on our barter program, which we believe is, you know, number one in the industry. It's growing. I think it's really good for us. When you look at the two businesses, they are a little bit different because in Seed we still do get some prepayments of cash going into the season. For CP, when we look at, you know, where we are going to increase credit offerings and so on and so forth, we're very, I would say, strategic customer by customer as to how we're going to go about that. As we sit here today, I think we've done a really good job of balancing that.

We did talk about a little bit more bad debt this particular quarter. When you look at our SG&A being up, you know, roughly $100 million in this first quarter, and we can unpack that if you want, but about, you know, 25% of that was bad debt. If we sit here today, though, our past due as a percentage of sales is very much in line, if not a little bit favorable to where we were at this point last year. It is something that we talk about, I would say, on a regular basis, the commercial teams along with the treasury teams, and we try to, you know, thread the needle between balancing risk and opportunities by customer.

Your next question comes from the line of Joshua Spector with UBS. Please go ahead.

Thanks. Good morning. This is Lucas Stone on for Josh. Just wanted to go back to the crop chem kind of volume acceleration in the second half that you're expecting there, where you're looking for volumes to kind of move up from low single digits in the first half to high-single-digits as we get into the second half of the year. Could you just kind of give us a bit more detail on where you see that coming from product wise and regionally, and just how would you compare kind of your growth there to what you're expecting for the market there in the second half? Thanks.

Yeah. Hi, this is Robert. I'll jump in on that one. When we talk about the second half of the year and the volume increase that we think we'll see as compared to what you saw, you know, first half or first quarter, it's primarily Latin America driven. Keep in mind that more acres are going into production again this year. You know, as Judd talked about, Safrinha could be flat, but those acres will get planted into a crop, and that still takes crop protection into it. The second thing on it is we have biologicals in that area that continues to grow, and we have some key products there, Utrisha N, BlueN being one. That's a nitrogen generator for the plants.

Keep in mind, you know, fertilizer pricing, as it is today, especially ammonia, urea pricing, this is an alternative. We're looking to continue to grow that, and we've seen double-digit growth this last year as well. Between biologicals in Latin America, between, add to it, the growth that we saw in first half or first quarter of spinosyn, because we're seeing increased pest pressure there, then just the overall addition of demand from more land and the tropical climate of resistance continuing to grow. That's really what's driving us in the second half to get the double-digit growth for crop protection.

Your next question comes from the line of Kristen Owen with Oppenheimer. Please go ahead.

Good morning, and thank you for taking the question. A little bit different tack on what's going on in the Middle East and how that influences your business. You know, Chuck, you noted the forward curve calling for more current corn acres. We've obviously had this significant shift in the global biofuels backdrop, not just here in the U.S., but Brazil, Argentina and Indonesia, really as a factor for mitigating that energy cost inflation. I'm wondering if you can talk about how you're thinking about this impact on your business, if you're seeing maybe some incremental interest in the new production system platform and winter canola. Just how the biofuels backdrop is maybe changing how you're thinking about exiting 2026 into 2027. Thank you.

Thank you for the question. We're very excited of sort of the momentum that's gaining literally around the world on biofuels, both traditional biofuels and I'd say next gen. It's a little too early to call it a structural change yet. If you look what's happening this year we're expecting to have another record demand year for biofuels globally. Last year was also a record. I think that we're gonna see even more demand if energy prices stay elevated globally.

Just to go around the world quickly, Brazil is moving to E32, and they're going to consume more of their domestic corn crop than they ever have, which I think structurally is going to be great for farming in Brazil and of course, help with energy costs in that country. Southeast Asia, as you mentioned, have lofty goals to be a leader, literally, in next generation aviation fuel. If they hit their goal, that's going to drive a lot of crop demand. Here in the U.S., I think we're close to an E15 year-round mandate. We still need to get that across the line, but it makes a lot of strategic and economic sense and certainly would help farming.

In fact, our view would be if we get to E15, it could consume up to another 15% of the U.S. corn crop. That would be very, very good, I think, for U.S. farmers. There's a lot here to like. We think that we're gonna see continued growth. If you look at our program, and maybe I'll have Judd just speak to it a little bit, you know, we have one of the leading biofuel crop development programs with multiple partners around the world, literally. Judd, maybe over to you.

Yeah. Thanks, Chuck. Maybe just talk near term, as we're getting ready in the south of the U.S. to harvest, roughly 100,000 acres of crop that went in last fall, focused with Bunge and Chevron sustainable aviation fuel. The crop looks good agronomically. Yields look like they're going to be in a favorable position. Farmers are going to be profitable with it. With that program, our retention rate with the farmers that have dove in and taken on this new cropping system has been over 90%. If a farmer tries it once, they've built it into their program and it's working very well for them. We're excited about that. We're going to expand somewhere north of 400,000 acres next year.

Materially growth over the last three years as we've proven out the concept. Don't know that maybe you've seen the most recent announcement we've had with our JV, 50/50 JV with bp, in Latin America, expanding mustard crops in Latin America, looking at a number of other crops as well, winter canola, sunflower. We're just getting started with that, with just a short list of employees that are standing that up. We'll have crop that starts to go in the ground in 2027 in a more material way, and we'll keep you informed on that. Very excited about our internal platform around biofuels and what the next 10 years, five years can look like there. Thanks for that question.

Your next question comes from the line of Ben Theurer with Barclays. Please go ahead.

Yeah, good morning. Thanks for taking my question. Just wanted to follow up a little bit on the, on the separation. You've talked about the capital structure for the two new businesses. Just wanted to understand what are like kind of like the considerations you're putting into place as it relates to the level of capitalization or level of leverage in between the Crop Protection versus then, the new company, the seed company, how we, how we should think about this, and then ultimately your ability to really engage in what you've talked about, like scaling the business into Seed, but also on the CP side. Just that capital split. How, how should we think about this? What is your current target?

Yeah. Right now, publicly, we've addressed that we would like both companies to have investment-grade metrics from a credit standpoint. I think we're in pretty good shape being able to hit those targets given how the strength of the overall Corteva balance sheet. Really, you know, when the board does final approval towards the actual split date, I think our major considerations are gonna be, one, as we talked about where the liabilities sit, liabilities are gonna stay with the company that they're in today. One of the elements we were able to address here and we announced today was the fact that, you know, the pension will be staying with new Corteva, and we're able to put this, you know, discretionary, I would say $1.5 billion payment in to ensure the funding level makes sense.

When you look beyond that, you're really just talking about cash levels and financial debt levels of the two. Both will be set up, I think, not only for investment grade metrics. It will also be, I think, an opportunity to actually be on the offensive when it goes, and they'll have plenty of strategic opportunities that they'll be able to execute on.

Your next question comes from the line of Laurence Alexander with Jefferies. Please go ahead.

Hey, good morning. This is Kevin. I stepped on for Laurence. Just back to the spin-off. You guys called out, you know, $100 million in dis-synergies. Just, can you walk through what remains to be sort of absorbed post-spin? And I guess sort of related how each company's, you know, eventual standalone margin profile would compare to today?

Yeah. When you look at 'Cause I think the fortunate situation for us in going into the spin is pretty much the way that we've been segment reporting will be the way that the business will be portrayed going forward. The only other adjustments there will be how are those corporate costs allocated between the two different businesses. Then you start looking at two other elements. One being net dis-synergies and which business do they go on. We had already talked about, you know, our opportunity to reduce that as much as possible. We're working very hard on that. Then the final element is, are there any agreements with any kind of shifts between the two businesses?

I think as we sit here today, there aren't any really material kind of shifts between the two businesses when it comes to operating ongoing business. It really will come down to the split of the corporate cost and where we land on net dis-synergies between the two businesses. I think what's fortunate for us, things like the margin profile of the businesses and certain things like that are not gonna change when you look at it post-split.

Your next question comes from the line of Arun Viswanathan from RBC Capital Market. Please go ahead.

Great. Thanks for taking my call. I hope you guys are well. Maybe I can just get your thoughts on the competitive environment in seed. Your main competitor I guess, you know, has been, you know, potentially a little bit strapped in the last few years, but they do have some new products coming out over the next few years. Do you view that as potentially a competitive threat or that reemerges? Or maybe, do you feel like, you know, there's the pipeline at Corteva. Maybe you can just discuss some of the pipeline projects you guys have as well that would maybe, you know, offset that.

I know you've talked about short stature corn in the past and wheat as well, but anything else you'd highlight? Thanks.

Yeah. Arun, this is Judd. Thanks for the question, and maybe just walk through kind of what our view of the world internally is for the next, you know, five-year window, then speak a little bit about the competitive environment. You know, obviously there's a lot of good competitors in the market. We're banging away with that, with with them at the farm gate each and every day. It all starts with germplasm. Our corn germplasm is as good as I've seen it in my 27, 28 years with the career with the company, continues to improve. The rate of genetic gain that our R&D team is bringing is tremendous.

The funnel, and just in terms of the diversity of germplasm genetics, being able to fill all of our brands and licensing is fantastic. Our Z-Series soybeans has been the best class of soybeans we ever brought to the market and continues to improve. We've still got about, well, we've settled in around 65%+ of Enlist penetration from a market perspective. Obviously there's gonna be some new competitive entrants in that space. Our germplasm is where it starts. The herbicide platform is important, but you know what? We got some other folks in the market that are catching up to where we've been with Enlist, we'll compete accordingly. If you recall, when we brought Enlist into the market, we had some material market share gains, but it wasn't this flip of the switch.

When Enlist came or when dicamba exited the market until they got their most recent label back, there wasn't this big switch, right? It's a lot about germplasm and yield, and will continue to be. We've got next gen above ground coming in 2030 in North America. Next gen above ground coming in 2030 in Latin America. 2030, 2031, we'll have above and below ground. Brand-new novel mode of action, proprietary, fully proprietary traits for Vylor. Feel as good as I've ever felt about our product portfolio. Our competitors aren't gonna stop. Certainly, they're gonna continue to work at it as well, but we've had a really good five-year run. I see the next five years being very similar. We've got a lot of things going in the right direction for us.

Your final question comes from the line of Patrick Cunningham with Citi. Please go ahead.

Hi. Good morning. You know, your differentiation mix of patented products within CP sits at roughly 65%. What's the target percentage for this mix by the end of the decade? What are the most, you know, meaningful patent cliffs we should be mindful of?

Patrick, this is Robert. Yeah, good observation. We're running about 2/3, a little bit north of 2/3 today on a portfolio being differentiated. As you look at our pipeline that's coming and how we think we'll continue to evolve, our new products are gonna be pushing $2 billion revenue this year and continuing to grow. We like what we've got there. Arylex, Rinskor are still not at their peak and are gonna continue. They'll outpace Enlist once they get to their peak revenue. We got more coming, as Chuck talked about, you know, at least seven actives that'll hit the market over the next decade. Your specific question, by the end of this decade, Haviza will come out. That's gonna be a blockbuster in Latin America for Asian soybean rust.

We've got some biologicals coming as well. We expect it will continue to grow, is the short answer. How far does it go? We've got to model a few things out, obviously. It will continue to increase slightly from where it is today as we approach the end of the decade. That added in with the biologicals is gonna give us a whole lot of strength as we look at that value proposition at the farm gate. 

We have reached the end of the Q&A session. I will now pass the call back to Kim Booth for closing remarks.

Corteva (CTVA) Q1 2026 Earnings Call Transcript

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