Corteva Q1 FY26 earnings call CTVA

Corteva delivered organic sales up 7% (Seed +9%, CP +4%) with operating EBITDA up 21% to over $1.4B and margin over 29% (up 240 bps), aided by an expected Q4-2025-to-Q1 Seed timing shift and an early Northern Hemisphere season on favorable weather. Currency was a 4%-of-sales tailwind on the top line and roughly $60M on EBITDA, primarily the euro. Management stressed the business is best read by half rather than by quarter, and while the full-year guide is unchanged, the first half is now expected up more than the ~7% originally modeled, allowing a slight de-risking of the back half.

Seed price/mix rose 3% with gains in every region and volume rose 6%, alongside continued growth in the Brevant retail brand. Net royalty expense fell another $30M in the quarter on lower in-license trait costs, and management now expects Corteva to become royalty-positive in 2026 for the first time (up from a prior royalty-neutral expectation) — a milestone tied to the February Bayer licensing agreement worth ~$1B of incremental revenue over the next decade. Enlist E3 is expected on ~65% of US soybean acres in 2026 as the #1 soybean technology, with over 100 independent licensees for PowerCore, Enlist corn and Enlist E3.

CP volume rose 6% with gains in every region, led by double-digit growth in new products and spinosyns, while price fell 2% on competitive dynamics primarily in Latin America. Management sees the global CP industry returning to modest low-single-digit growth in 2026 after a flat 2025 and weak 2023-2024. Supporting signs include higher energy/oil costs inflating active-ingredient production in India and China (driving price increases on certain AIs), an ~8% price increase from China's reinstated VAT export controls, and a slight, recent slowdown in Chinese CP exports into Brazil. Differentiated/patented products run a little above two-thirds of the portfolio, with new products pushing ~$2B in revenue this year.

The separation remains on track for Q4 2026, structured as a reverse spinoff in the Form 10 with New Corteva (Crop Protection) presented as a discontinued operation. Milestones this quarter included naming Luke Kissam as New Corteva CEO (joining June 1), announcing both executive leadership teams, filing the initial Form 10 (public filing expected late Q2), and unveiling the Seed company name 'Vylor' (derived from 'valor'). One-time^📎 costs are ~$350M and net dissynergies (~$100M, $50M in guidance) are trending favorably, helped by an ~$80M Q1 restructuring to right-size the org across 22,000+ employees. Full strategic and financial plans come at the September 15 Investor Day.

The Board approved a $1.5B discretionary contribution to the US pension plan as part of positioning both future companies for stand-alone investment-grade credit profiles; the pension liability will stay with New Corteva. The contribution is pretax, with associated tax savings of about $290M. Q1 free cash flow was used ~$700M more than the prior year, driven mainly by the Bayer agreement payout, but underlying business conversion remains in the 40-50% range (45% midpoint), and full-year conversion excluding discrete items^📎 should meet the 2024 Investor Day midterm target. A ~$500M first-half buyback is planned.

Management is upbeat on biofuels as a demand driver — another record global demand year expected, with Brazil moving to higher ethanol blends and consuming more domestic corn, Southeast Asia targeting aviation fuel leadership, and a potential US year-round E15 mandate that could consume up to ~15% more of the US corn crop. Corteva is harvesting ~100,000 acres of a winter oilseed cropping system (with Bunge and Chevron) for sustainable aviation fuel this year, with >90% farmer retention, expanding to north of 400,000 acres next year. A new 50/50 JV with BP in Latin America will expand mustard and other oilseed crops, with crop in the ground in a more material way in 2027.

The back half depends heavily on Latin America, where more acres go into production and biologicals (weighted to H2) contribute more meaningfully. Corteva expects flat Brazil safrinha (second-crop) corn area versus years of expansion, as elevated fertilizer and fuel prices could influence both how much and what is planted; a corn-to-soy shift there would be far less than the North American move. Higher oil prices are a ~$40M back-half headwind with active mitigation, and bad debt ticked up (~25% of a ~$100M Q1 SG&A increase), though past-due as a percent of sales remains in line or slightly favorable versus last year.