Corteva Q3 Earnings Call Highlights

Key Points

• Corteva cut its 2026 adjusted pro forma operating EBITDA outlook to $1.1 billion–$1.125 billion from about $1.3 billion, primarily because of weaker prices and volumes and excess distributor inventory in Brazil.
• Third-quarter sales fell 9% to $1.6 billion and operating EBITDA dropped 17% to $222 million. Latin America sales declined 31%, outweighing growth in North America, EMEA and Asia Pacific.
• Corteva has frozen hiring, tightened spending and begun a broader cost review; management expects the transformation to take four to eight quarters and sees growth in 2027.

Corteva NYSE: CTVA lowered its full-year earnings outlook after a sharp deterioration in Brazil’s agricultural market and elevated inventories in the distribution channel outweighed growth in other regions.

The company now expects 2026 adjusted pro forma operating EBITDA of $1.1 billion to $1.125 billion, down from the approximately $1.3 billion it estimated at its September investor day. Chief Financial Officer Jeff Rudolph said the reduction was entirely driven by Brazil, where the company expects lower prices and volumes.

Third-quarter net sales fell 9% to $1.6 billion, while operating EBITDA declined 17% to $222 million. The operating EBITDA margin contracted 140 basis points to 14%.

Chief Executive Officer Luke Kissam said difficult grower economics, high interest rates, currency effects and El Niño weather patterns contributed to the deterioration in Brazil. Corteva also entered the year with more of its own products in the Brazilian channel than expected after too much of what it sold there last year was not applied on farms.

“We did not anticipate the magnitude nor the speed of the deterioration we have experienced in Brazil,” Kissam said. “We own that, and we are taking steps to address the issue.”

Brazil weighs on outlook

Latin America organic sales fell 31% in the quarter, with volumes down 24% and prices down 7%. Rudolph said the region’s sales declined by about $220 million, more than offsetting roughly $70 million of growth across the rest of the world.

Rudolph estimated that elevated channel inventory would reduce full-year EBITDA by approximately $100 million. He said roughly half of the approximately $200 million reduction from the prior outlook was tied to that inventory issue, with the remainder attributable to other market weakness, including further price erosion in Brazil.

Corteva is not assuming a meaningful improvement in Brazilian purchasing behavior for the rest of the year. Its updated guidance implies fourth-quarter EBITDA will be about half of the prior-year level on an adjusted pro forma basis. The company expects full-year operating earnings per share of $0.76 to $0.80, up about 3% at the midpoint, helped by lower operating income tax expense.

Kissam said market data through September indicated Corteva had maintained its share of on-farm applications in Brazil, although overall market sellout was down roughly 12% year to date. He expects the company’s channel inventory there to return to a more acceptable level by the end of the Brazilian growing season.

The CEO said Corteva was assessing how to operate profitably in Brazil, including its infrastructure and routes to market. He said the company would not extend credit to already overdue distributors or push inventory into other regions to address the Brazilian overhang.

Growth elsewhere offsets some pressure

Outside Latin America, North America sales rose 7%, while Europe, the Middle East and Africa grew 12% and Asia Pacific increased 3%. North American volume rose 19%, more than offsetting a 12% decline in pricing that Kissam attributed to actions involving the herbicide acetochlor.

New product volumes increased 20% globally in the quarter, with growth in every region. Kissam said volumes for Arylex herbicide and Pyraxalt insecticide each grew more than 20% year over year. The products have combined annual revenue of about $650 million, he said.

Rudolph said approximately $60 million of the quarter’s $120 million pricing headwind came from U.S. acetochlor. He expects an acetochlor-related headwind of about $40 million in the fourth quarter, with year-over-year effects diminishing in 2027.

Through the first nine months, sales were $5.4 billion, down 1%, while operating EBITDA was essentially flat at $943 million. The EBITDA margin expanded by 30 basis points despite more than approximately $230 million in pricing headwinds, Rudolph said.

Cost review and capital plans

Kissam said Corteva has instituted a hiring freeze, tightened selling, general and administrative spending, and begun reviewing its cost structure with a third party. Some research and development projects will be slowed so the company can prioritize others, he said, although R&D investment increased during the quarter.

The company is examining manufacturing, logistics, back-office operations and whether certain products or markets should be exited. Kissam said a broader transformation could take four to eight quarters, with more information on nearer-term cost actions expected at the next earnings call.

Kissam said he expects the business to grow in 2027, partly through costs and volume, but that the company still needs to complete its planning. He also expects share repurchases to be part of 2027 cash deployment priorities, while separation-related constraints prevent buybacks in the fourth quarter.

Rudolph said Corteva ended the third quarter with approximately $1.8 billion in cash on a pro forma basis and remains on track for about $1.5 billion at year-end. He clarified that the year-end target is cash, not net cash, and said the company expects to use cash in the fourth quarter.

About Corteva (NYSE:CTVA)

Corteva, Inc. is an agricultural science company that develops and supplies products and services for farmers. Its business focuses on seeds and crop protection, including technologies intended to help improve crop performance and manage weeds, insects, and plant diseases. Its seed portfolio includes corn, soybean, and other crop varieties, sold under brands such as Pioneer and Brevant. Corteva's crop protection offerings include herbicides, insecticides, fungicides, and biological products, alongside digital tools and services that support farm decision-making.

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