Corteva, Inc. (NYSE:CTVA) Q4 2022 Earnings Call Transcript

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When you begin to roll that now forward to 2023 we expect that our new products will continue to see high-teens growth. It’s going to have — those three products will be well over $300 million each in total revenue and the upside there is that it’s going to depend on more demand from our technology. It’s strong and we don’t see a whole lot of downside from the new products primarily because farm fundamentals are healthy. Growers are sitting on good profits. And then with that they’re trying to maximize value and to do that you turn to new technologies to do that and that’s where we come to play in this area. So this is a good story that really helps us play out I guess a proof point of our strategy to build more differentiated portfolio and these new products are a key piece of that.

Chuck Magro: Yes. Frank, maybe I’ll add one other point. It’s not necessarily a new product, but we’ve got the new Spinosyns franchise capacity that will come into the market in 2023. So beyond what Robert said around that existing portfolio, we’ve got a capacity expansion and one of the most profitable franchises we’ve got with Spinosyns and that will start to go into the market, the new capacity this year. So we’re looking forward to good things from that franchise as well.

Operator: And moving on to Arun Viswanathan with RBC Capital Markets.

Arun Viswanathan: Great. Thanks for taking my question. So just looking at the guidance, it looks like you’ve noted that the cost headwinds are largely weighted to 1H 2023. Is there any potential for maybe cost to surprise to the downside or upside? How would you kind of look at that? And if so is the pricing that you have in place sufficient to offset some higher costs if there is any possible increase, or would you be able to enact pricing to offset that? I’m just wondering what drives the lower end of your range there.

Dave Anderson: Maybe I could just introduce and then Tim and Robert you guys could comment respectively on your business. As we said, and you correctly stated that the majority of our call it market driven headwinds. So think of that as commodity and input costs as well as freight and logistics. The majority of that on a year-over-year basis will occur — about 80% of that in terms of our forecast is going to occur in the first half and we’ll see improvement/relief. Still we’ve got those costs going up but at a much more modest rate in the second half of the year. In the big picture on the pricing as we expect as we did in 2022 that we’ll see seed pricing more than offset those commodity cost increases. And on Crop Protection we’ll see the ability to cover those costs. And by the way it also offset the currency impacts that we’ve built into the guide the EBITDA approaches I shared with you earlier. Tim, you want to comment a little bit more about seed?

Tim Glenn: Yeah. Dave on the seed side, I’d say for the first half we have a very good understanding of what our seed costs are that seed we would have produced last year. And so consider in the barn and well-understood in terms of the cost that we have there and we’ve been live in the marketplace with pricing for really since August in North America. And given where we’re at in the market, we got great performance, very good demand for our technology. And I would describe our pricing as being well accepted in the marketplace. And again that’s largely driven by good value proposition our ability to go out there and demonstrate value to our customers. So North America in a great spot. We’ve been live in Europe for about three months and again understood what our cost position was.

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