Dave Anderson
Executive Vice President, Chief Financial Officer at Corteva
Thanks, Chuck, and welcome everyone to the call. Let's start on Slide 6, which provides the financial results for the quarter and year-to-date. You can see from the numbers we had another quarter of strong performance. Quickly touching on the third quarter, organic sales increased 22% compared to 2021 with double-digit growth in both segments and in all regions. This translated into earnings of $96 million for the quarter, growth of nearly 290% and margin improvement of more than 550 basis points. So, another quarter of impressive growth and margin expansion.
Now it's important to note that the third quarter includes some timing benefit from volume that was originally forecasted in the fourth quarter that shifted into the third quarter. This is incorporated in our updated full year guide in the implied fourth quarter that we'll go through in a moment. This guide also includes third quarter performance favorability lives through for the full year.
Turning to year-to-date, organic sales grew 16% over prior year with broad-based price and volume gains. Global pricing was up 10% through the first nine months with notable increases in both Seed and Crop Protection. Volume growth in Crop Protection of 13% was driven by the strength of new products, which delivered more than $470 million of sales growth year-over-year, increase of almost 50%. We delivered approximately $2.85 billion in operating EBITDA in the first nine months, a 23% increase from the same period last year. This is impressive given the continued cost inflation, commodity price and currency volatility and the war in Ukraine, pricing, product mix and productivity more than offset the higher costs incurred as well as an approximate $270 million currency headwind driven predominantly by European currencies. This earnings improvement translated into more than 190 basis points of margin expansion year-over-year, reflecting an execution including the portfolio decisions that Chuck referenced earlier.
So, with that, let's go to Slide 7, where you can see the broad-based growth with double-digit organic sales gains in every region through the first nine months. In North America, organic sales were up 11% driven by Crop Protection, on demand for new technology, including Enlist herbicide. Seed volumes were down versus prior year, primarily due to a reduction in U.S. corn acres and supply constraints for canola in Canada. Soybean volumes were up 5% versus prior year, driven by continued penetration of Enlist. Both segments delivered pricing gains with 6% pricing in Seed, 18% in Crop Protection, more than offsetting higher commodity input costs. In addition, we're confident that we gained market share in both corn and soybeans in North America.
In Europe, Middle East and Africa, we delivered 21% organic growth compared to prior year, driven by price and volume gains in both segments. Seed pricing increased 12% and helped to mitigate currency impacts. In Crop Protection, demand remains high for new and differentiated products, driving volume growth of 18% through the first nine months.
In Latin America, organic sales increased 24% with double-digit volume and price gains. Pricing increased 14% compared to prior year, driven by our price for value strategy, coupled with increases to offset rising input costs. Seed volumes increased a modest 1% due to tight supply of corn, while Crop Protection volumes increased 16% driven by demand for new products.
Asia Pacific organic sales were up 12% over prior year on both volume and price gains. Seed organic sales increased 27% on strong price execution and the recovery of corn planted area. Crop Protection volume growth of 2% was again led by demand for new and differentiated products.
Let's now turn to Slide 8 for a summary of our operating EBITDA performance. Through the first three quarters, operating EBITDA increased $540 million to $2.85 billion, and as I covered on the prior slide, strong customer demand drove broad-based organic growth with price and volume gains in all regions. Year-to-date, we've incurred approximately $830 million of market-driven headwinds and other costs driven by higher Seed commodity cost, Crop Protection, raw material costs and freight and logistics. We delivered approximately $175 million in productivity savings, which helped to partially offset these cost headwinds. We continue to maintain disciplined spending with SG&A down as a percent of sales more than 200 basis points from the same-period last year. Currency was a $270 million headwind driven primarily by European currencies. Standing back, you can see the organization's ability to meet increased customer demand, while effectively managing cost headwinds through pricing, product mix and productivity. And again, we believe this performance really differentiates Corteva.
Turning now to Slide 9. I want to make several points about the updated outlook for the full year. With the backdrop of our strong performance through the first nine months, we are affirming our full year revenue guidance to be in the range of $17.2 billion to $17.5 billion, or 11% growth at the midpoint, including approximately 3% headwind from currency. And as Chuck said, ag fundamentals remain strong as we finish out the year. However, we are monitoring supply availability as well as volatility in currency markets.
We're raising the midpoint of our full year operating EBITDA guidance, now expected to be in the range of $3 billion to $3.1 billion, or 18% growth at the midpoint. This updated guidance includes an estimated $50 million EBITDA favorability. In the third quarter, that is expected to carry-through for the full year. For the full year, high-single-digit pricing is expected to offset headwinds from higher input costs in currency, lower spend driven by cost actions that we discussed and strong collections resulting in lower bad debt accrual also supports this outlook. The updated earnings guidance translates into approximately 110 basis points of operating EBITDA margin expansion for the year, again impressive in this environment.
Our full year EPS guidance remains unchanged at a range of $2.45 to $2.60 per share as higher operating EBITDA is expected to be somewhat offset by higher exchange gain and loss impact. On free cash flow, we continue to perform well against our working capital metrics, including our days sales outstanding and inventory days' supply. DSO continues to improve reflecting the strength of farmer income as well as customer collections. Inventory days sales or IDS is trending higher this year given the significant increase in Seed costs and the replenishment of Crop Protection inventories.
We're now expecting higher working capital balances in absolute dollars for the year but working capital to sales relationship is tracking to prior forecast. Our current thinking is that these higher working capital levels will result in free cash flow closer to the lower end of our previous guidance range or roughly $1 billion free cash flow for the full year 2022.
So now let's transition to a discussion on Slide 10 on the setup for 2023. You can see our initial planning framework is intended to provide key assumptions as we began the transition. We see 2023 as a continuation of the momentum from 2022, while also balancing the uncertainty of the economic environment, specifically given the appreciation of the U.S. dollar in 2022 and continued volatility in foreign exchange markets, we expect additional currency headwinds in 2023, and we're going to continue to use financial hedging to mitigate the risks from certain currencies and use local pricing in key markets to offset the impact wherever possible. Nonetheless, we see another year of foreign currency translation headwind in 2023. While we expect cost inflation levels to begin to moderate over the course of '23, we will see cost headwinds in 2023 in both Seed and Crop Protection driven by commodity costs as well as raw materials.
Drought conditions in Latin America earlier this year have put pressure on seed supply in the region. This will be a headwind to our corn volume growth in the first half of 2023, but we expect inventories to recover in the second half of the year. Our current estimate for U.S. planted area is to be slightly up for the 2023 season with a slight bias towards corn acres based on the current relative economics for farmers. This is clearly a positive for Corteva. In addition, in Latin America, we expect corn planted area to increase low-to-mid single-digits.
On price for value strategy, that continues to be a key lever to offset inflation. Pricing for our yield advantage technology and differentiated solutions is expected to more than offset higher cost of goods sold. And as Chuck said earlier, we're making progress on our portfolio simplification, exiting commodity glyphosate products among other non-strategic product lines and geographies will create a headwind to our base business volume growth. However, it will be accretive to margins and the overall impact to operating EBITDA will be positive.
We'll see an estimated $100 million reduction in net royalty expense next year driven by continued Enlist penetration and the increase of units in our proprietary genetics. Enlist E3 soybeans will represent approximately 70% of U.S. soybean sales in 2023 and we expect about 65% of those will be in our own Corteva germplasm. This will support increased overall market penetration of the Enlist E3 and will of course be a direct EBITDA lift. And finally, on our productivity and cost actions, the expected savings from our productivity work and restructuring programs will more than offset the increased investment in R&D for next year. So coupled with a strong market outlook and solid grower economics, we believe we're well-positioned for another strong performance here.
Let's now go to Slide 11, and just summarize some of the key takeaways. The company has taken very important steps in its strategic roadmap, including portfolio simplification and investing in growth. By exiting non-strategic product lines, we could focus on key markets and provide differentiated solutions to farmers. And with the acquisition of Symborg, we've taken another important step building our biologicals business. It's clear that our organization is executing well. We're very pleased with the strength of our results through the first three quarters. The strong year-to-date performance gives us confidence to raise the midpoint of our full year operating EBITDA guidance.
And let me just say a few words about capital deployment. As a reminder we plan to repurchase $1 billion in shares in 2022 with $800 million completed through the third quarter. Since 2019, we've returned more than $3.3 billion of cash to shareholders through dividend and share repurchase, a clear commitment to deliver value to our shareholders. And finally, we believe that we've continued with this continued favorable momentum that will carry us into 2023 as we look to continue both performance and growth. So more to come as we make progress to advance our strategic framework and drive continued operating EBITDA margin expansion. We believe these strategies will further differentiate Corteva and deliver increased value for years to come.
And with that, let me turn it back over to Kim.
