Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Corteva Agriscience 2Q 2024 Earnings. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. I will now turn the call over to Kim Booth, Vice President of Investor Relations. You may begin.

Good morning. And welcome to Corteva’s second quarter and first half 2024 earnings conference call. Our prepared remarks today will be led by Chuck Magro, Chief Executive Officer; and Dave Anderson, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, 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 statements. Please note in today’s presentation, we’ll be making references to certain non-GAAP financial measures. Reconciliations of 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. We plan to update you today on our second quarter and first half performance, share our latest expectations for the second half of this year. In the second quarter, Corteva delivered both top and bottom line growth and nearly 250 basis points of operating EBITDA margin expansion. This was driven by strong demand for our proprietary technology, which was also particularly evident in our Seed business results. We also saw Crop Protection volumes grow, a sign that the industry is starting to stabilize after almost two years of decline. Seed continued its impressive trajectory in the first half of the year, with 420 basis points of operating EBITDA margin expansion and broad-based pricing gains across all regions. While North America corn acres are down year-over-year, the team has managed to hold volumes relatively flat and gain share in the first half, a testament to both strong demand for our latest corn hybrids, as well as the strength of the Pioneer business model. Performance in Seed remains strong across products and technologies, and we are proud to be number one in the North America seed market for both corn and soybeans. We are particularly pleased to see Enlist E3 continue to be valued by farmers and believe E3 technology is the future. It is on at least 65% of U.S. soybean acres in 2024. Earlier this year, we announced the commercial availability of Pioneer brand Z-series soybeans in the U.S. and Canada, which is the next generation of industry-leading genetics with the Enlist traits. This new class of soybeans offers farmers a strong defensive package, with a generational leap in yield potential and agronomic performance over any soybean lineup Pioneer has ever introduced. In extensive 2023 IMPACT trials, Z-series soybeans showed an average yield advantage of 2.7 bushels per acre over our own A-series soybeans, which delivers substantial economic benefit to growers. Our royalty income stream is also accelerating quickly in corn. In the first half of this year, we grew our royalty income by an impressive 40% when compared to the same period last year, led by the strength of new corn trait technologies like PowerCore Enlist. Our strategy of becoming a technology seller is gaining traction as reflected in our margins. Turning to the Crop Protection business, we can say that here too our technology remains a driver for farmers. By the end of June, we had registered over 100 new Crop Protection products globally. These new product registrations give farmers access to new, cutting-edge solutions that can help them increase yields and grow more food and fuel. Overall, the Crop Protection business continues to navigate an imbalanced market, driven largely by residual destocking and competitive market dynamics. Still, we are encouraged by the 6% volume improvement in the second quarter. Although net sales and operating EBITDA were down for the half, we’re still anticipating that 2024 will be another year of top and bottom line growth and margin improvement for Corteva. Record-setting demand for grain, oil, seeds and biofuels is expected to continue through the end of 2024. On-farm Crop Protection demand remains stable as farmers prioritize technology to maximize yield and we expect the market to begin to move towards more of a balance between sell-in and sell-out at the channel. We also anticipate that farmers will continue to prioritize investments in top-tier seed technologies, given their direct impact on yields. To reflect the impact of the competitive market dynamics and weather-driven missed applications in North America and Europe in the first half for Crop Protection, we are lowering our full year net sales guidance by about 1% and operating EBITDA by about 2%, versus the midpoints we guided to last quarter. A few comments on 2025. It’s still early and we need to see how the full year of 2024 plays out. Generally speaking, we remain constructive on 2025 and we are on a path that would get us into the framework for operating EBITDA and margin improvement. We feel good about what we can control delivering meaningful royalty benefits, productivity and cost deflation on a year-over-year basis. Recall when we adjusted the 2025 framework back in February, we indicated that it was contingent upon stabilization in the Crop Protection market in 2024 and a return to growth in 2025. The volume improvement in the second quarter has given us some optimism in our second-half growth assumptions, but we’re monitoring the competitive pricing environment very closely. We’ll be providing more of a detailed update on our views of 2025 at our Investor Day event in November. Now turning to the outlook. The U.S. crop mix shift from corn to soybeans played out as we expected. However, the main feature of the 2024 growing season thus far has been the U.S. corn and soybean crop condition ratings have been running well above 2023, creating an expectation for strong yields. Time will tell, but it is clear that strong yields are being dialed into the corn futures. As global stocks of major grains and oilseeds stabilize, commodity prices have started to come under pressure, indicative that we’re now below mid-cycle pricing. These lower prices combined with higher interest rates have led farmers to tighten their operating approach. But there is still a lot of confidence with the vast majority of farmers, and they know the formula for success and how to be prudent with the investment decisions they make in their operations. Brand trust and the years of experience and expertise behind it is also extremely important. Farmers can always find cheaper seeds, but with Corteva brands, they know they can trust our long history of incremental annual yield improvement, which gives them confidence in the outcome, as well as peace of mind. And like most of us, once you experience the best, it’s hard for farmers to settle for anything less. With that, let me turn it over to Dave for insights on our financial results and outlook.

Thanks, Chuck, and welcome everyone to the call. Let’s start on Slide 6, which provides the financial results for the quarter and the half. You can see from the numbers here, sales and operating EBITDA for the first half were down slightly from prior year, although a little better than our latest estimates, driven by a strong finish in North America’s seeds season. Briefly touching on the quarter, organic sales were up 2% compared to prior year, with gains in both Seed and Crop Protection. Pricing for the quarter was up 2%, with gains in Seed partially offset by continued competitive pressure in Crop Protection. Second quarter volumes were flat with volume gains in Crop Protection, led by Latin America and North America, offset by Seed volume declines in North America due to first quarter and second quarter timing. Topline growth and continued productivity and cost actions translated to earnings growth of 10% in the quarter in nearly 250 basis points of margin expansion compared to prior year. Now focusing on the half, as a result of the tough first quarter, organic sales were down 2%, with Seed growth offset by Crop Protection. Seed pricing gains were mid-single-digit compared to prior year and offset by Seed volume declines, which were driven by lower planted area in EMEA and in Asia. Crop Protection price and volume were both down in the half on competitive market dynamics in the really tough comp of the first quarter of 2023. The topline performance translated into operating EBITDA of approximately $2.95 billion for the half, down slightly compared to prior year. Seed pricing, the benefits from improved net royalty expense and productivity savings drove nearly 60 basis points of margin expansion. Let’s now go to Slide 7 and review sales by segment. Seed net sales were up 2% in the half versus prior year. Organic sales were up 4% on broad-based pricing gains as we continue to price for value. Global seed pricing was up 5% with gains in every region and across the portfolio. In Crop Protection, both net sales and organic sales were down 11% in the half. Pricing was down 4% compared to prior year, driven by competitive price pressure and market dynamics. Crop Protection pricing in EMEA was up 2%, largely in response to currency. Crop Protection volumes were down in the half, although we did see volume growth of 6% in the second quarter. Demand for new products, expenses, drove volume gains over last year, and importantly, we continue to expect volume growth in the second half, driven largely by Brazil. With that, let’s go to Slide 8 for a summary of the first half operating EBITDA performance. For the half, operating EBITDA was just under our record first half 2023 to just over $2.95 billion. Pricing gains, coupled with improvement in net royalties and productivity actions, were offset by volume declines in cost and currency headwinds. Higher Seed commodity costs and Crop Protection inflation on input costs, reflecting the sell-through of higher cost inventory, were more than offset by benefits for reduced net royalty expense and productivity savings. SG&A for the half was up 1%, including an additional $25 million of spend compared to prior year related to biologicals acquisitions. Excluding these costs, SG&A would have been approximately flat versus last year, despite merit and inflation. Let’s now go to Slide 9 and transition to the updated outlook for the year. The updated full year guidance reflects the current Seed and Crop Protection markets and the best judgment of our key variables for the second half. We now expect net sales to be in the range of $17.2 billion to $17.5 billion, or up 1% at the midpoint. The lower guidance and revenues is primarily due to North America and EMEA Crop Protection price and volume in the first half of the year, in the updated second half BRL to U.S. dollar assumptions. Operating EBITDA is now expected to be in the range of $3.4 billion to $3.6 billion, 4% growth compared to prior year at the midpoint. The updated guidance is driven by lower topline growth, partially offset by less discretionary spending. We also now expect a cost tailwind for the year, driven by improved royalty expense, Crop Protection raw material deflation and productivity benefits, and while we still expect increased R&D and SG&A for the year, the increases will be more modest than our prior guidance. With the strength of Seed performance in the first half and Crop Protection volume and cost improvement in the second half of the year, we now expect operating EBITDA margin for the year of approximately 20% at the midpoint of guidance or approximately 55 basis points above of margin expansion over last year. Operating EPS is expected to be in the range of $2.60 per share to $2.80 per share, roughly flat versus last year at the midpoint. The change in EPS from our prior guidance primarily reflects lower earnings at the midpoint. We’re reaffirming our pre-cash flow guidance of $1.5 billion to $2 billion or approximately $1.75 billion at the midpoint, and cash flow to EBITDA conversion rate of 45% to 50% for the full year 2024. And finally, we’re on track to complete $1 billion of share repurchases for the year, including $500 million completed during the first half. We also recently announced a 6.25% increase in the annual dividend, consistent with the dividend growth strategy. Now, both of these are testimony to the strength of our balance sheet and the cash flow outlook. Going now to Slide 10, let’s look at the key drivers for the first half performance and the setup for the remainder of the year. Again, the first half results were overall slightly ahead of our expectations, driven by the strength of the Seed business. North America delivered an impressive performance with 4% growth in organic sales compared to prior year, despite the 3% reduction in U.S. corn acres. Crop Protection first half results were impacted by competitive market pressures. Overall Crop Protection industry conditions have begun to improve, but not yet fully stabilized. Crop Protection experienced low-single-digit rate inflation on input costs through the first half. Those market-driven cost headwinds were offset by benefits related to reduced seed net royalty expense and productivity action. SG&A and R&D, as expected, were up modestly compared to last year. Now, if you turn to the right side of Slide 10 regarding the second half of the year, our assumptions are largely consistent with what we shared with you in early May. In Seed, we expect a rebound in Brazil’s safrinha corn area after a reduction in the 2023-2024 season. However, an additional risk in Latin America is Argentina’s planted area due to corn stunts. Crop Protection volume gains will drive much of the growth in the second half, with pricing expected to remain challenged. Our assumption is for volume growth versus prior year, led by Brazil, and demand for new products and biologicals. Importantly, the order book for the second half Crop Protection sales in Brazil is trending ahead of last year. Available data suggests channel inventories are trending down. These data points are positive signals that the market is moving towards more stabilization and supports the assumptions for volume growth in the second half. And as you know, we expect to see input cost deflation in Crop Protection during the second half of the year. Coupled with productivity and cost actions, we anticipate a cost tailwind for Crop Protection. And as a reminder, we expect an increase in SG&A spend for the full year 2024, driven by normalized bad debt and compensation accruals and will also continue to increase the investment in R&D. So the balance of improved Crop Protection market conditions in Brazil and the continued focus on cost controls will drive second half growth. It’s important to point out the allocation of earnings between third and fourth quarters. We expect normal earnings patterns for the second half, which implies an operating EBITDA loss in the third quarter, and therefore, all of the second half earnings delivered in the fourth quarter. So let’s now go to Slide 11 and summarize the key takeaways. First, operating EBITDA performance for the first half was largely in line with expectations led by the strength of the Seed business. Regarding the full year, driven mostly by the current market dynamics in Crop Protection, we’re updating our full year guidance, but still on track for sales and earnings growth in 2024. Seed momentum continues through the first half, driven by the strength of the portfolio and strong demand for our latest technology, particularly in North America, with market share captured in both corn and soybeans. Overall, it’s been an impressive first half for the Seed business and continuing a strong trend by seed. Looking forward to the second half of the year, Crop Protection volume gains in Latin America and cost improvement from raw material deflation and productivity actions will drive much of the year-over-year EBITDA growth. And finally, strong first half cash flow results keep us on track to deliver the midpoint of our free cash flow guidance range of $1.75 billion or approximately 50% conversion rate. And with that, let me turn it back over to Kim.

Thanks, Dave. Now, before we get into the Q&A, Chuck, I believe you’d like to make a few closing remarks.

Thanks, Kim. I’d like to say a few words about the announcement we made after market yesterday that we will have a new Chief Financial Officer starting September 16th. David Johnson will join Corteva from Atkore, a publicly traded company and leader in electrical safety and infrastructure solutions, where he also served as CFO. David is an accomplished CFO with a proven track record of delivering strong results, operational efficiency, and financial discipline to large global organizations like ours. He has nearly three decades of experience, and as I’ve gotten to know David throughout this process, I believe he is the perfect choice for Corteva. David will, of course, succeed Dave Anderson. To ensure a smooth transition, Dave will continue to serve on the executive leadership team as a strategic advisor to me until his retirement in the first quarter of 2025. Dave joined Corteva over three years ago, which was, as many of you will remember, both a pivotal and critical time in our history. With his wealth of experience and his considerable expertise across industries, Dave gave this company, its Board, and its leadership assurance that this company’s financial strategy was in the best of hands, and I think the results speak for themselves. So before I turn it over to Dave, I’d like to thank him for his service and his dedication to Corteva, to our investors and shareholders, and to our customers and employees. Dave, thank you. It’s been an absolute privilege to serve alongside you, and with that, over to you.

Thanks, Chuck. I really appreciate the kind words. It’s obviously just been a terrific opportunity to work with Corteva, to work with you and the organization over the last several years, and I’m proud of what we’ve been able to accomplish, and I’m really pleased with the strengthening of finance team and the alignment of the finance organization to support our Crop Protection and Seed business unit. And I’m looking forward to supporting David in this transition. I know it’s going to be a successful one. So thanks very much.

Thanks, 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.

Our first question comes from Vincent Andrews with Morgan Stanley. Your line is open.

Thank you. And first of all, Dave, congratulations on your retirement and thank you very much for all the help over the past three years. Chuck, if I could ask you on your sort of initial comments on 2025, and please correct me where I’m wrong, but it sounded to me like you were sort of softening your stance on 2025 and sort of not saying, hey, I took 2024 down by $100 million, so just take that existing $3.9 billion to $4.4 billion range down by $100 million. So I want to check in on those bridge items and see what’s still intact versus what your incremental concerns might be. So you had $100 million of royalty improvement for 2025, another $200 million of productivity and cost actions for 2025, and I know we had been talking about but hadn’t quantified some seed cost deflation for 2025, and then at least I expected some more crop chemical deflation for 2025. So if you could update us on those items, if there’s any change, and then also indicate, is it the Crop Protection pricing that you’re concerned about maybe deteriorating further or are you worried about being able to get seed price mix in 2025 if the futures curves stay where they are? Thank you.

Yeah. Good morning, Vincent. So great question. I guess let me start by just saying we still have a lot of conviction over 2025. We feel very good about the things that are obviously in our control, and if you’ve looked at sort of how we describe the controllable levers, whether it’s Seed out-licensing, the productivity and cost improvement that we’re working through, biologicals growth, all these things, we said $350 million to $450 million in both 2024 and 2025. We’re thinking that that number now is certainly north of $400 million for each of the years. So very good around the controllables. When you think about Seed, we remain very comfortable with our base assumptions for 2024 and moving into 2025 and I would even go beyond 2025. The technology pipeline that we’ve built, we think is second to none in the industry, and our out-licensing now is ramping up very nicely as we made comments in our prepared remarks. And then as you rightly called out, we can see deflation now that’s in the P&L in both Seed and CP. You’re right, we have not given you full quantities yet. We’ll do that at the right time. But we think that that could be a significant tailwind as we think through 2025 and even beyond that. So when you put all that together, we’re very comfortable with, if you look at the forward guide now for 2024 and then you look at some of the ranges we’ve provided for 2025 and what we call the value framework, we’re very comfortable we’re on a path to that range. The biggest question though, and we can’t ignore it, right, is not when we think about CP pricing. So we needed to see a few things in this quarter, and so we’re feeling pretty good that we saw volume growth in Q2 when it comes to CP, but it’s been a pretty competitive environment when it comes to pricing. And so that’s the thing that we’re watching. We’re not overly concerned, but it’s something we’re keeping an eye on. And the 2025 framework then needs to connect to that. And what we’re hoping to see now is further stabilization in the CP industry. And then eventually this market will return to growth because we’ve got two years now where we’ve seen declining organic growth, and to see three years, it would be quite unprecedented. It’s happened before, but it’s been quite rare. And so we’re still feeling that our base assumption of some growth in 2025 makes sense. And when you put all that together, I think the value framework would still be very comfortable for Corteva.

And our next question comes from the line of Joel Jackson with BMO. Your line is open.

Hi. Good morning. Just following up on that. So the last hour, one of your competitors was talking about seeing kind of 6% revenue growth next year in crop chemicals. Speaking to what you’re talking about, a volume recovery but competitive prices price decline. So I know it’s following up on the prior question here, but is that in the ballpark of what you’re seeing more higher or lower, and why would you be higher or lower than say that benchmark?

Yeah. Let me give you a perspective, Joel, and then I’ll have Dave just talk about how we built the forward guide and Dave can give you some specifics. So, when we look at CP for the second quarter, our price was down approximately 5%, but our volumes were up 6%, and we really needed to see the volume growth. I think from a Corteva perspective, and I’m only going to speak about Corteva today. I think what we wanted to do is make sure that we manage the inventories going into the channel. Because look, we need to learn from what’s happened, right? And we want our recovery when we look at Corteva to be sustainable as we work through the quarters. And so we’re very comfortable. We like the path that we’re on. I think when we think about how we guided the market, it’s important to say that the midpoint came down about $100 million. Really, that was sort of first half impact, right? But we had some pretty significant weather that impacted the CP business, we lost some sprays, both in Europe and the U.S., and then there was the pricing dynamic, which we’ve already called out. So now when you think about how to think about the rest of 2024, Dave, I’ll let you kind of comment on that.

Sure, Chuck. Regarding 2025, we will discuss the details and specifics at a later time, as it is still too early to comment on that. However, Joel, let me briefly touch on our pricing assumptions for the first half. Afterward, we can discuss the overall market, and Robert, you might want to share some insights on the demand we’re seeing at the farm gate and its stability. For the first half, as you may have noticed, we experienced approximately a 4% pricing headwind in the Crop Protection business, with 3.5% specifically in the first half. Our expectation for the full year is that this will be somewhat higher, likely in the low to mid-single digits, primarily due to the geographic mix. As you know, there has been a significant increase in Latin America's share of the total in the second half, which is influencing this number.

Thanks, Dave. Joel, we finished the first half as expected. Moving into the second half, you can expect growth from three main areas in Crop Protection: new products, spinosad, and biologicals. These will contribute around 65% of our total growth in the second half. These product lines are outperforming the market and our overall portfolio, and this trend has been consistent historically. Additionally, our confidence is bolstered by a healthy order book in Brazil, which is significantly stronger than last year, at about 20% ahead of where we were at this time last year. This development reassures us that progress is being made. And then we think when you look at our biologicals, we have 70% of our full year orders already in hand. And so once again, it gives us lots of optimism for the second half that we’ll be able to do what we’re saying we can do and that’ll roll into 2025.

And your next question comes from the line of Chris Parkinson with Wolfe Research. Your line is open.

Good afternoon. So one of your competitors put out its preliminary U.S. Seed price card fairly early. I think 10 years ago it would have been hard to go in August and now we have somebody putting out an early July. What are your presumptions in the marketplace of why that was done in terms of your current share gains in certain row crops, presumably soy, as well as your ongoing field performance? It’s probably a little bit early to comment on the latter, but just any commentary and insight on why you think that was done would be particularly helpful. Thank you.

Hey, Chris. This is Tim. I’ll try to address this. It’s difficult to speculate on the reasons behind releasing a price card early. When a price card is released ahead of time, there’s often a lack of clarity regarding details. You can’t be certain about the combination of products they plan to sell or their expected growth margins. My best guess is that no farmer has made a purchasing decision based on that yet. We’re currently working on our plans for 2025 and are just weeks away from finalizing things in North America. We usually maintain a consistent timeline, and we'll adhere to that. In Europe, it will take a bit longer, likely a month or two. As we think about going into this market, obviously every year is a little bit different, and it’s different in terms of the environment you’re selling into, as well as what you’re bringing to the market. What I’d say is in 2025, as we put together our pricing plans, especially in North America, it’s really driven by innovation and new technology. And the value approach that we take in terms of delivering value to our customer doesn’t change here. So on corn, we have a very favorable mix enhancement as we think about introducing new hybrids with Vorceed and PowerCore, two very exciting and important technologies on corn that we’ll be ramping up this year. And as was mentioned earlier in the prepared remarks, we’re also going to have a significant ramp up of our Z-series soybeans, which will be within Enlist and really take our value prop to the next level with farmers.

And the next question comes from the line of Kevin McCarthy with Vertical. Your line is open.

Thank you and good morning. Chuck, in adjusting the guidance, you called out a number of different factors, including corn stunt and the impact on acreage in Argentina, some flooding in Southern Brazil, and the Crop Protection chemical pricing environment, and perhaps, there are other factors. And so my question would be, how would you sort of rank order the relative importance of those? And then with regard to the pricing dynamic in particular, I was wondering if you could expand on the question of whether or not you had any one-time incentives embedded in the 5% price erosion as one of your competitors seemed to highlight earlier this morning.

Good morning, Kevin. So let me, I’ll start and then Dave should certainly comment. So, as we’ve mentioned already, the lowering of the guide was really a lot driven by where we are after the first half. So weather, missed applications and then the CP pricing dynamic. The second half of the year, when we start thinking about it, what we’re looking for is CP volume growth and a similar pricing dynamic that Dave just called out. And really the determining factor for the confidence in the second half will be on two things. It’ll be on controlling the cost and the productivity controllables that we have, and we feel very good about that. And then Brazil, and really it’s Brazil volume that we’re focused on. When you start thinking about the range though, the upside and the downside and the guide range, we kept it this time a little bit wider than we normally do at this time of the year, and that’s really to reflect some of the uncertainty we’re seeing in Argentina when it comes to corn stunt. And Argentine farmers right now are not looking to buy the Seed. So it is an uncertainty and there’s a lot of different estimates out there.

And then the assumption for the midpoint certainly captured when we’ve said this before in Brazil, to capture some of the planted acres that we lost last season. And that was really driven by weather. So we think things are looking better in Brazil, but time will tell and it’s still a little early to call victory on that as well. And then if you think about the upside of the guide range, and Dave, you should weigh in on this, that would have the global CP market starting to stabilize and more of a return to growth, which isn’t out of the question in this market environment, but we did put that as the upside for the guide range.

And your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

Thank you and good morning. Chuck, just again, back on Crop Protection, I think you said, you’re not overly concerned on the pricing pressure here. Why is that? And specifically, is the threat from generic producers in China, in your view, more or less than it was a year or two ago? Thank you.

Yeah. So, look, we think that there’s a lot going on in the Crop Protection industry, David, and a lot of this that we’ll reference now, we think will run its course, and it’s on a pathway of having an improved and what I would consider to be a healthier Crop Protection market overall. So when you start thinking about all of the moving parts here, what we’re finding is that a lot of the industry players now are moving through their high-priced inventory, which is natural and it’s part of the healing process that we would consider as part of the overall industry dynamic. But what I would say is that, the fundamentals, what you have to keep sort of first and foremost, and the reason we’re not overly concerned, and we’ve said this in the prepared remarks, but it’s important to state again, on-farm demand is healthy. And in the first time in two years, I’d say what’s going into the channel is now coming out of the channel. And so this is just a much healthier overall structure that we haven’t seen in a couple of years. So that gives us some confidence. And then what we needed to see was the volume growth into the channel in the second quarter. That was the first sign of what I would consider to be a stable market. And so the pricing dynamic is the way we’ve described it. But as we work through this journey a little bit more and we need now to finalize this with Brazil, because we would say that from a destocking perspective, the U.S. and now I’d say Europe, they’re more or less destocked. And if you notice, we haven’t used that language too much today, because we’re feeling that the industry is finally behind that.

And your next question comes from the line of Josh Spector with UBS. Your line is open.

Good morning. I have two quick questions. First, could you share your volume expectations in Crop Protection for the second half, particularly as you go through the third and fourth quarters? One of your competitors mentioned a stronger fourth quarter compared to the third. Do you see it that way as well? Secondly, looking ahead, Chuck, considering your industry experience, you've discussed your confidence in Seed pricing. However, what have you observed in previous cycles regarding trade downs, especially in the first year when farmers are facing tighter conditions?

Yeah. On the volume stem for second half in Crop Protection, I’ll let Dave talk specifically about some of the splits, but relatively balanced. Dave can reference some more numbers if needed there. But when you think of us on Q3 and Q4, we don’t have a large swing. It’s about normal is the way I would think about it. Things are moving, as Chuck talked about, more stabilized. Brazil inventories are approaching normal ranges. And a large part of our business is Latin America in the second half. Specific to volume, we’re going to be in mid-teens up on a second half basis. And again, that gives us optimism on how we see things shaping up for second half. Dave, something to add?

Yeah. On the Seed side, we get the question a lot about the trading down and maybe I’ll think about it in a couple ways. One is, in terms of technology ladder, it is very difficult for a farmer, once they’ve had certain Seed technologies, to be able to move down the ladder, if you want to think of that. So if they’re used to planting, above ground insect control with certain herbicide-resistant traits, they kind of built their operation around that. If they’re used to being triples above and below ground with multiple modes of herbicide resistance, they kind of are built that way, equipment, labor, the whole bit is around that and we’ve not seen any meaningful trade down over time. And certainly, as recently as six years or seven years ago, we were in a very difficult environment and didn’t see the trade down at that point in time. When considering the genetic aspect or the potential for trading down brands, it's important to recognize that while Seed products might appear interchangeable with various trade packages offered by different companies, the decision to choose Seed is deeply emotional for farmers. They need to feel assured that the genetics will deliver reliable yields that meet their expectations. Furthermore, they require the capability to withstand challenges over time, along with support and service from their sales representatives. In such scenarios, our value proposition must resonate well with our customers, and we are confident that what we provide will add value to their operations. Additionally, during times like these, especially when profit margins are tight for farm operations, every last bushel can represent the entirety of their profit or contribute significantly to their cash flow.

We don't take our responsibilities lightly. Our commitment to our farmer customers is to ensure that the hybrids we offer next year are an improvement over this year's. We invest significantly in research and development and plant breeding to achieve this. This also builds our credibility in the marketplace.

And your next question comes from the line of Frank Mitsch with Fermium Research. Your line is open.

Hey. Good morning, and congrats, Dave, on your pending retirement. It has been a pleasure working with you. There’s been a lot of discussion, obviously, on Crop Protection volumes and price. The common theme is higher volumes, but lower price. When do you think we might get back to an environment where pricing is flat or perhaps even positive on Crop Protection?

Yeah, Frank. So I think we’re approaching, I don’t want to give you a quarter because, look, this whole dynamic that we’ve all faced with the destocking is almost unprecedented. And if I provide a quarter, I’m definitely sure I’ll be wrong. But we’re looking at the trend lines and we’re very encouraged at where we’re at. First and foremost, like we said a couple times already today, we did need to see the volume grow and we saw that. And we needed to see the volumes entering the channel and leaving the channel at about the same rate. And thank goodness, on-farm demand has been healthy. I think many of us are now moving the high-priced inventory through the P&L and into the marketplace, which is another important step. And our inventories, Dave, they’re still a little higher than we’d like, but they are a lot better than they have been over the last couple of years. So, when you put all this together, I think we’re on a path of recovery or what we call stabilization. We feel like this is where we needed to be at this time of the year. But we do need to see how the second half actually unfolds. But that’s why we have, I think, guarded optimism is the way I would describe it.

And your next question comes from the line of Steve Byrne with Bank of America. Your line is open.

Sorry about that. There’s a fair amount of uncertainty out there about whether dicamba will be available in 2025 or at least by early 2025. And I’d like to hear your view on, like, how would you rank the benefits to your business profitability-wise from that risk driving more independent Seed companies to license your Enlist germplasm and corn and soy, which you mentioned is gaining some momentum, Chuck. Is that a bigger benefit to you from such an uncertain outlook for dicamba versus increased shift to your own proprietary brand, your own Pioneer brand in Enlist corn and soy? How would you rank those?

Hey, Steve. This is Tim. I’ll start off and then let Chuck finish. Like everyone else, we’re keeping an eye on how things will unfold. We are seeing very strong adoption of Enlist E3 soybeans, and we believe it now represents over 65% of the market, which is significant growth considering it was above 55% last year. I do think there is still potential for further growth, although it's challenging to quantify due to the uncertainty regarding the product label and the ability to use it in season. That’s really the main question at this point. Looking ahead to 2025, I expect market adoption to increase. There likely won’t be many new companies entering since there are already over 100 licensed companies selling Enlist E3 soybeans.

I won’t say much more than that on the dicamba. I think Tim covered it well, but if you just look at the strategy that we’ve implemented just a few years ago to be a technology seller instead of a technology buyer, we’re very pleased with that. And you can start to see some of that path to royalty neutrality that hit our bottom line, right? Like over 400 basis points of margin expansion in Seed. This doesn’t happen overnight. This has been a long investment cycle. But if you think about how our soybeans and our corn is performing and we do have the latest in the next-gen technology in the pipeline, as Tim already called out, with Vorceed and PowerCore, and then Enlist E-Series now adding to the mix and becoming more important. And this year we’re over 200 new hybrids and varieties in the marketplace. Next year we’ll be at a similar number. We think that the strength of our Seed business will continue to gain momentum. And then when you think about some of the lower costs and the deflation, as we called it, flowing through the P&L, we just like the path that Seed is on. I think the first half this year was a record, but I think that this business is just getting started. So we’re extremely pleased with the performance of our Seed business right now.

And the next question comes from the line of Jeff Zekauskas with JPMorgan. Your line is open.

Thanks very much. In your corn product line in the U.S., did doubles grow faster than triples? And you said that your corn royalties were up 40%. Is that a $20 million benefit or $10 million or $30 million? Can you size that?

I’ll start by mentioning that our product mix remains fairly stable over the years. We’ve had a strong offering in the past, and while we're transitioning to PowerCore and Vorceed, we continue to have a solid competitive presence. When looking at year-over-year comparisons, our product mix doesn't change significantly, except for minor fluctuations. Overall, I would characterize it as stable. As we roll out new technology, the focus is more on upgrading and replacing rather than making drastic changes to our mix. On the corn licensing front, we are specifically seeing growth with PowerCore and Enlist. We have been actively licensing our genetics with these traits for the past few years, and we are starting to see that momentum build. Now, I'll turn it over to Dave to provide insights from a financial perspective.

Yeah, good morning, Jeff. The total royalty income, which refers to the 40%, is not limited to just corn. It's our overall figure. What this means for us is an increase of about $35 million. I hope that clarifies things.

And your next question comes from the line of Kristen Owen with Oppenheimer. Your line is open.

Great. Thank you so much. I wanted to ask about the moving pieces on the free cash flow guidance, since that was held stable, but you did lower the net income outlook. So, if you could just update us with your thoughts on working capital. And while I understand it’s probably too early to say on 2025, just given that the operations puts and takes that you’ve defined already, just help us understand how much of the working capital benefit is being captured 2024 versus 2025? Thank you.

Sure. So, just quickly, thanks for the question. As you probably saw, we had benefits from both inventory and accounts payable with some offset in receivables in terms of our cash provided by working capital relative to the prior year. So if you will, the change on the change. So inventory was just under $500 billion of benefit, $165 million and accounts payable about $659 million. And then again, we got some offset in accounts receivable and deferred revenue. I think those trends are going to continue. We’re going to see continued benefit in terms of inventory as we sell through, in terms of cost of goods sold and the volume that we forecast for the second half of the year. And the same way with payables as procurement tends to now start to normalize. So we’ll get that benefit. Receivables are going to continue to be a bit of a headwind, particularly with the increase that we’ve got now in volume and revenues in the second half and particularly in the fourth quarter of the year. And when you look at the geographic mix of those revenues. It’s a little early to talk about 2025 with any degree of precision. We’re obviously encouraged by what looks like a 50% free cash flow to EBITDA conversion for this year. We want to sustain that and improve that if possible going into 2025. So, again, that’s something that’s a little early, but we’ll update you on. We’re quite encouraged right now with the way in which cash is shaping up.

And the next question comes from the line of Edlain Rodriguez of Mizuho. Your line is open.

Thank you. Good morning, everyone. I mean, Chuck, just wanted to get your insight into Crop Protection, the relationship or if there’s any relationship between volume we’re covering and the pricing pressure that we’re seeing. Like, is there a relationship or will farmers apply the products regardless of pricing so pricing doesn’t dictate what’s going on with volume at all?

Good morning, Edlain. Right now, the agricultural economy is facing tighter margins compared to the last couple of years. However, farmers I’ve talked to this summer in the Midwest are still committed to protecting their crops. While they’re conscious of their spending due to current margins, they consider the return on investment for every dollar they spend. When they invest in Seed or Crop Protection, they expect a return. We’ve noticed that some farmers opt for more basic products, which may require them to use larger quantities since these alternatives aren't as effective as newer technologies. Even though they might purchase at a lower price, they end up using more product. Overall, farmers are making prudent investment choices to maximize their yields since that affects their sales and returns. Technology remains important, and we need to ensure that farmers see adequate returns from their investments. Looking at our Crop Protection portfolio, we believe we can better assist farmers in making informed decisions.

And I will now turn the call back over to Kim Booth. Okay. So that concludes today’s call. We thank you for joining and for your interest in Corteva. We hope you have a safe and wonderful day.

And this concludes today’s conference call. You may now disconnect.