And with that, let me turn it back over to Kim.
Kim Booth: Thank you, Dave. Now let’s move on to your questions. I would like to remind you that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.
Operator: [Operator Instructions] And we’ll go first to Vincent Andrews from Morgan Stanley.
Vincent Andrews: Thank you and good morning. Could I ask on the Crop Protection business if you could just talk about volume and price in the following manner. From a volume perspective in 2024, could you talk about markets where destocking is still ongoing. How bad are you expecting the volume to be versus markets where you think it’s sort of finished? What are you expecting from a volume perspective? And then likewise, on the price side of the equation, can you differentiate at all about how price is performing in destocking markets versus those markets that have made completed or closer to the end of it?
Chuck Magro: Yes. Good morning, Vincent, it’s Chuck. What I’ll do is I’ll give you the overview and then Robert can talk about some of the specifics in the market, and we’ll try to do this as quickly as we can. Look, if you think about the overall situation, last year was a pretty tough year in global CP. Where we think we are this year is that the CP market, what I’d say broadly speaking, they’re still imbalanced but only in a few regions. So Brazil is still a market where we have ample supply. And there are pockets, I would say, in Europe. But the US, the destocking is largely behind us now. And the market is functioning quite normally and I’d say, is healthy. When you look at it globally, the situation that we see for 2024 is that the overall global industry most likely will be down low single digits.
And that is, as you rightly called out, it’s really a function of price. Volumes seem to be stable and growing, and we expect that in 2024 and then our early look — so then if you think about this, the first half, I think, is going to be fairly tough in CP. Things should normalize and stabilize in the second half of the year, and this is a broad statement globally. And then as we look to 2025, we believe that 2025 will look more like the historical CP industry. So low single-digit, return to normal growth is how we’re sizing up 2025. And then that growth will be off of a new lower base. So that’s the setup for 2024 and a first look at 2025. Robert, do you want to just talk specifically around markets?
Robert King: Add a little bit of color around markets and some of our product groups. Start with, as Chuck talked about, the industry being down overall, but growth in volume, and we will reflect that as you think about walk around the world with our regions that by and large, we’re up everywhere on volume. Price will continue to be a competitive market in all of our regions, specifically in Brazil, where destocking, as you pointed out, still needs to take place. We’ll be watching to see how the rest of the season works out to see, how are we positioned for that 2024-2025 season there. But as you look at our portfolio, we’re able to really begin to use or leverage our differentiated portfolio, the new products and Biologicals.
And as you’ll have seen in 2023, new and differentiated products were up 5% on pricing with a market that was in very much a headwind of price. And so we expect that those products, the new products, Spinosyns, Biologicals are all going to see upward gains in price and volume over this next year. Specifically in our Biologicals, when you think about the acquisition and the pricing that, that part of the portfolio uses, our EBITDA actually is going to be up 2x on a year-over-year basis with Biologicals as you look at the second year of the integration of the acquisitions and coming to full fruition there. So we’re working for great things out of those three areas of our portfolio. And then specific to pricing, we will continue to follow the strategy that we had of price for value.
Yeah, it’s competitive. There’s always going to be a price volume pull, but like I said, when you think about our portfolio of new differentiated and Biologicals making up nearly a majority of our entire earnings, we think we’re in a pretty good position to be able to price through this as we continue to work through the year.
Operator: I’ll go next to David Begleiter from Deutsche Bank.
David Begleiter: Thank you. Good morning. Chuck, on your 2024 and 2025 guidance, you’re expecting the midpoint EBITDA of $200 million in 2024, but up $550 million in 2025. Can you discuss why the accelerated growth in 2025 versus 2024 on EBITDA? Thank you.
Chuck Magro: Yeah. Good morning, David, and Dave can give me some perspective as well here. But if you start thinking about the situation, just the way we’ve looked at the market, the Seed market remains very healthy, and we’ve talked about sort of on-farm demand for top technical and Seed, but also for CP being very stable and very steady. So that is the backdrop, and then when you consider the fact that you’ve got the CP industry and if you take the comments we’ve just made, where we still have some destocking in 2024, that’s going to impact our business. And that’s reflective in how we’ve set up the guide and then where we believe we can hit in 2025 is really the impact of having that global CP market stabilize and then start to go again in 2025.
And then there’s this large bucket of sort of value creation, which is, we call it, controlling our controllables, it’s self-help, it’s cost, it’s productivity, it’s the royalties that we’ve seen improvement in expenses in our out-licensing royalty growing. If you think about that, in 2023, that number was approaching — well, it was over $500 million. And we’re going to see now going forward in 2024 and again, in 2025, somewhere between $350 million and $450 million of sort of self-help controllables, and that has some deflation. But that’s really — one of the big issues here is we’re starting to see deflation move through our P&L, primarily now in CP. And because of how we manage risk management and hedging in our Seed business, there’s going to be even more benefit as we get into 2025.
So to your specific question, some of it has to do with just the rate and the timing of seeing some of the deflation come through the P&L. And then there are some accounting normalizations, Dave, that you should hit.
